The new tax law eliminated several beneficial deductions and credits. Many filers may have the opportunity to receive a significant tax break, while others may see theirs decrease as a result of new deduction rules. Unfortunately, most people won’t know exactly what part of that spectrum they will fall under until they fill out their forms.
However, you can plan ahead of time knowing that there are the deductions that will be reduced or eliminated in 2018.
- The mortgage interest deduction. Any home indebtedness that is taken after December 15th, 2017, can be deducted for mortgage interest paid up to $750,000 (previously $1 million).
If you are married filing separately, than that the interest deduction is limited to the indebtedness of $350,000.
- Limited deductions for state income, real estate, and sales tax. There was previously no limit to how much could be deducted for state and local income, and real estate taxes. In 2018 the deductions are limited. If you are married filing jointly the deduction is limited to $10,000, and $5,000 if you’re single.
This includes all taxes – state income tax, sales tax, and all real estate taxes.
- Deductions for job-related expenses and other misc., deductions on qualified tuition and fees, and mortgage and insurance premiums have been eliminated.
- Medical expense deduction. There are limits on deductions taken for medical expenses. For years 2017 – 2018, you can deduct unreimbursed medical expenses that exceed 7.5% of adjusted gross income.
- Mileage allowances for 2018. Taxpayers can deduct 54.5 cents per mile for business mileage, 18 cents per mile for medical and moving mileage, and 14 cents per mile for charitable mileage.
