7 Tax Breaks Eliminated Or Curtailed

Personal exemptions. This longstanding break was axed, and for many it won't be missed because of a near-doubling of the standard deduction to $12,000 for individuals, $18,000 for heads of household and $24,000 for joint filers. The personal exemption was $4,056. This was not technically a deduction, which you subtract from your taxable income; as an exemption, it was a dollar-for-dollar reduction of your tax bill. For a single parent with, say, three children—who would get the standard deduction of $18,000—the personal exemption might have been a better deal unless the standard deduction didn't put the parent in a lower tax bracket. Partly offsetting the loss of the personal exemption is the increase of the child tax credit to $2,000 from $1,000.

Unlimited home equity loan interest deduction. Through 2017, you could deduct interest on a loan you took out to buy a boat, fund a vacation or for any endeavor not related to real estate. No more. Now, the loan must be connected to home improvement. What's more, the total of the mortgage and the home equity loan can't be more than $750,000.

Unrestricted state and local tax (SALT) deductions. This is a big deal for residents of states like New York and California, which have both high property taxes and hefty state income taxes. Before the TCJA, these levies could be deducted from a federal return, no matter how lofty they were. For the 2018 tax year, however, the so-called SALT write-offs are capped at $10,000. In California, the average SALT deduction had been $20,000.

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This article was written by a professional financial journalist for Meg Green & Associates. and is not intended as legal or investment advice.

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