When you file your 2018 taxes at the top of next year, you’re sure to notice some new elements as a result of the changes made to the tax laws in 2017. There were major tax reforms that were passed by Congress, and they could impact the taxes you owe or the refund you get back when tax time rolls around again.
Here are some of the biggest tax changes you’ll see when filing 2018 taxes:
Standard deductions have gone up
Standard deductions are going up across the board. Married couples filing taxes jointly used to get a standard deduction of $13,000, but that deduction will now be $24,000. Single taxpayers as well as those who are married but file separately used to get a standard deduction of $6,500, but that deduction is now jumping up to $12,000. And for anyone who files as a head of household, the standard deduction will now be $18,000 as opposed to $9,550.
The child tax credit has also gone up
Do you have a child or multiple children? The child tax credit is also going up for 2018. Parents used to be able to claim a child tax credit of $1,000 per qualifying child. But now, parents of children under the age of 17 will get a credit of $2,000 per qualifying child. There is also going to be a $500 credit available for parents who have dependents that don’t meet the qualifications for the $2,000 credit.
The cap for the mortgage interest deduction has decreased
Homeowners used to be able to get a mortgage interest deduction for interest paid on mortgages with up to $1 million in acquisition debt. The next sentence is OK. The last sentence should end with “capped at mortgage interest paid on mortgages with up to $750,000 in acquisition debt.
There are new contribution limits for retirement savings
If you participate in specific retirement plans through your employer, such as a 401(k), a 403(b), or a 457 plan, you’re now eligible to contribute up to $18,500 in 2018. That’s up from $18,000 in previous years.