The first major American tax overhaul since 1986 has arrived. What does it mean to you and how does it affect your planning for retirement? While this is a highly complex and voluminous law, there are seven important elements you need to know:

1. Standard Deduction:

The standard deduction (the dollar amount that non-itemizers may subtract from their income before income tax is applied) has almost doubled and the amount depends on your tax filing status.

2. Personal Exemption

The personal exemption (the dollar amount that each individual taxpayer is able to deduct for him or herself and child in the U.S. who must file a tax return) has been eliminated.

3. Top Income Tax Rate

A new 37% top rate will affect individuals with income of $500,000 and higher or $600,000 for married taxpayers filing jointly.

4. Estate Tax

The estate tax exemption doubles to $11.2 million per individual and $22.4 million per couple.

5. Child Tax Credit

The child tax credit has been raised to $2,000 per qualifying child who is under the age of 17. A $500 credit is available for dependents who do not get the $2,000 credit.

6. Mortgage Interest

The deduction for interest is capped at $750,00 for mortgage loan balances taken out after December 15th, 2017. The limit is still $1 million for mortgage s that were established prior to December 15, 2017.

7. State and Local Taxes

The itemized deduction is limited to $10,000 for both state income and property taxes paid during the calendar year.


As you begin to digest these important tax law changes, you should consider consulting with your tax advisor and retirement advisor to take advantage of planning opportunities that could affect your overall retirement plan. It is more important now than ever to have your tax preparer collaborate with your retirement advisor to ensure you are taking full advantage of the new law. We will continue to dig into the new law to learn the impact on your personal and business taxes in the months to come.

This information is not intended to be a substitute for specific individualized tax advice.