2018 Income Tax Brackets and Standard Deduction Rates

The Tax Cuts and Jobs Act (TCJA) was signed into law by President Donald Trump on December 22, 2017.  With its passage many tax payers were given some much needed tax relief.  Notable changes include:

•  Elimination of personal exemptions

•  Elimination of the “Pease” limitation on itemized deductions

•  Expansion of the Child Tax Credit

•  Standard deduction for single filers increased by $5,500 and by $11,000 for married couples filing jointly (see Table 2 below)

•  Tax table changes (see Table 1 below)

To protect individuals that are pushed into higher income tax brackets due to reduced value from credits and deductions instead of increase in real income (known as “bracket creep”), the act also requires that the IRS adjust numerous tax provisions for inflation.

 

Table 1. 2018 Income Tax Brackets and Rates

 

Table 2. 2018 Personal Exemption and Standard Deduction

The personal exemption for 2018 is eliminated

 

Child Tax Credit

The Child Tax Credit under TCJA is worth up to $2,000 per qualifying child.  The age cut-off stays at 17 (child must be under 17 at the end of the year for taxpayers to claim the credit).  The refundable portion of the credit is limited to $1,400.  This amount will be adjusted for inflation after 2018.