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The Tax Cuts and Jobs Act (TCJA) generally reduces individual tax rates for 2018 through 2025. It maintains seven individual income tax brackets but reduces the rates for all brackets except 10% and 35%, which remain the same. It also makes some adjustments to the income ranges each bracket covers.

Business owners may not be able to set aside as much as they’d like in tax-advantaged retirement plans. Typically, they’re older and more highly compensated than their employees, but restrictions on contributions to 401(k) and profit-sharing plans can hamper retirement-planning efforts.

INDIVIDUAL PROVISIONS

Tax Brackets

The following tax brackets are for the years beginning January 1, 2018.

Single
Married Filing Joint
Married Filing Separate
Head of Household
Bracket

$0 - $9,525
$0 - $19,050
$0 - $9,525
$0 - $13,600
10%

$9,525 - $38,700
$19,050 - $77,400
$9,525 - $38,700
$13,600 - $51,800
12%

$38,700 - $82,500
$77,400 - $165,000
$38,700 - $82,500
$51,800 - $82,500
22%

$82,500 - $157,500
$165,000 - $315,000
$82,500 - $157,500
$82,500 - $157,500
24%

$157,500 - $200,000
$315,000 - $400,000
$157,500 - $200,000
$157,500 - $200,000
32%

$200,000 - $500,000
$400,000 - $600,000
$200,000 - $300,000
$200,000 - $500,000
35%

$500,000 +
$600,000 +
$300,000 +
$500,000 +
37%

 

Standard Deduction

The standard deduction has been nearly doubled, which means the number of taxpayers who itemize will drop drastically.

With the possibility that tax law changes could go into effect next year that would significantly reduce income tax rates for many businesses, 2017 may be an especially good year to accelerate deductible expenses. Why? Deductions save more tax when rates are higher.

On October 12, an executive order was signed that, among other things, seeks to expand Health Reimbursement Arrangements (HRAs). HRAs are just one type of tax-advantaged account you can provide your employees to help fund their health care expenses. Also available are Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Which one should you include in your benefits package? Here’s a look at the similarities and differences: HRA. An HRA is an employer-sponsored account that reimburses employees for medical expenses.

Charitable giving allows you to help an organization you care about and, in most cases, enjoy a valuable income tax deduction. If you’re considering a large gift, a noncash donation such as appreciated real estate can provide additional benefits. For example, if you’ve held the property for more than one year, you generally will be able to deduct its full fair market value and avoid any capital gains tax you’d owe if you sold the property.

If you’re charitably inclined but concerned about having sufficient income to meet your needs, a charitable remainder trust (CRT) may be the answer. A CRT allows you to support a favorite charity while potentially boosting your cash flow, shrinking the size of your taxable estate, reducing or deferring income taxes, and enjoying investment planning advantages.

Do you have a vacation home that you use for the holidays? If you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences: If you rent it out for less than 15 days: You don’t have to report the income.

With Veterans Day this past weekend, it’s an especially good time to think about the sacrifices veterans have made for us and how we can support them. One way businesses can support veterans is to hire them. The Work Opportunity tax credit (WOTC) can help businesses do just that, but it may not be available for hires made after this year.

Various limits apply to most tax deductions, and one type of limit is a “floor,” which means expenses are deductible only if they exceed that floor (typically a specific percentage of your income). One example is the medical expense deduction. Because it can be difficult to exceed the floor, a common strategy is to “bunch” deductible medical expenses into a particular year where possible.