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    Categories: Taxes and Retirement

Losing the $4,050 Personal Exemption in 2018 But Doubling The Standard Deduction

As part of the GOP tax reform bill to support President Trump’s tax reform agenda the Personal exemption is being fully eliminated in 2018. The $4,050 personal exemption in 2018 (which was unchanged from 2017) can be taken for yourself, your spouse, and your eligible dependents, will be scrapped. This could mean that single parents or families with lots of dependents could see a higher tax bill as a result, while higher income filers with no kids/dependents will likely fare much better due to their ineligibility for this exemption (income limits) under current law and from the other offsetting tax breaks in the new tax bill.

Several itemized deductions like SALT and alimony payments are also being cut back or eliminated entirely. This is supposed to be offset by the near doubling of the standard deduction, higher income 2018 tax bracket thresholds and increased Child Tax Credit (CTC). The idea is that by increasing the standard deduction and removing several deductions and the personal exemption, tax payers will not need to itemize for claiming extra deductions in their 2018-19 tax returns thereby making the tax filing process simpler and smoother.

Note that the personal exemption was not able to be permanently scrapped by the GOP due to Senate rules but will be suspended until 2025, unless extended by Congress then.

View Comments (49)

  • I'm at about 15,000 in itemized deductions including SALT (just under 10K), mortgage interest, donations. I do not have kids. Unless the tax brackets are going to wildly help me I don't see how losing the personal exemption won't leave me paying *more* in taxes in the end.

    • Read the law, you get a $24,000. dollar deduction. This yr. my standard deduction and personal exemption together was $23,300. Wife and I are both over 65. Because of our age our standard deduction was $2,500 more than a couple under 65. So a young couple with no children starting out would get $12,700 standard ded. plus $8,100 personal exemption for a total of $20,800. So in 2018 they are getting $3,200 more deducted from the AGI. Now, the people with a bunch of kids will probably get hurt by this a little. Maybe they want people to have less kids. he he

      • John, there are NO personal exemption in 2018. AND not every one is a two (couple). Single individual, will have a standard deduction of $12K. that is it. So even if they itemized and have $15k in deductions, that is $3k more than standard so they will take the itemized number. However, since there is NO $4k (ish) personal exemption, they will pay taxes on $4k more of their income. If the exemption were still in place, they would have reduced their taxable income by the $3k above standard deduction, plus the $4k exemption, for a total of $7k which is clearly more than the $3k reduction per the new law.

      • YOU KEEP MISSING KELLY'S POINT. SHE WONT RECIEVE THE 24K -- SHE'S SINGLE WHICH DROPS HER DOWN TO THE 12K STANDARD. She had 11k in itemized prior plus her exemption. No kids for child tax credit. She will have more taxable income in 2018.

    • Welcome to the republican way of life... you will pay more and with all the cuts in state programs look fo an increase in sales tax

  • IF YOU ITEMIZE YOUR DEDUCTIONS CAN YOU STILL CLAIM THE $4,050 personal exemption.

    • Did you read the article or know anything about the bill that was passed? The personal exemption was eliminated.

      • Yup, it were. The people making babies for a tax deduction might suffer.

        • wow Grace, I bet your parents were bullies since you call people you do not know an idiot. there are people that do have children for the tax breaks.. I know some of them

        • You're an idiot John. Making babies and supporting them until at least they're 18 is spending more than $4050 per year. I bet if your parents didn't have kids/kid like you, they will have more money saved back then.

  • The child tax credit is a credit off your taxes or a payment to your if you are at zero owed. The tax credit is not a deduction off of income. If you have two children you have lost their exemption. However $4000 will be deducted from your taxes or paid to you as a refund. For example imagine that you have two children and you would owe $4000 in taxes the two child tax credit will mean you owe nothing. If you have two children and you owe not taxes the IRS will send you a check for $4,000. I understand that this is confusing but remember a tax credit comes directly off of the line of taxes owed and can be paid back if it makes your taxes negative.

  • Ignoring the changes in tax brackets, strictly looking at just the personal exemption, it can negatively impact single filers without dependents, as well. For individual middle income earners on the low end like me with a mortgage who prefer to itemize, under the existing law my tax refund is greater because of the personal exemption. For simplicity sake, if I had currently have $11k in deductions + I claim the $4 k personal exemption, thus my taxable income is reduced by $15 k. Not having the option, I would have to use the double standard deduction instead at $12k, therefore losing $3k in income reductions. Basically, the main tax payers who will benefit by the this change in the new law are those who could not previously itemize or those whose both itemized deductions + personal exemption were less than than double the standard deduction.

    • they are giving you $8000.00 over what the standard deduction is at this time. It will help out a lot of people who cannot itemize because they are single & no children. I am all for giving it a try to see if I get more than the $400.00 I usually get since I am retired.

    • Your logic does not register with me. Why would you take $15.000 in deductions when they are giving you $24,000.00 right off the top. I think I would take the $24k and file the simplest return possible. So, according to you comment above you would prefer $15k in deductions verses $24k in deductions. I would seriously reconsider, if I were you.

      • John, the $24K deduction is for filing jointly as a married couple.

        Kelly is talking about single filers and is correct in stating the deduction is $12K. So, her logic is correct.

      • John, I think Kelly said she was single so she would only get $12,000 not the $24,000 which is for Married filing jointly.

      • "...it can negatively impact single filers without dependents, as well."

        $24K is to a couple, and $12K is for individual. I would seriously reconsider my reply, if I were you.

      • John, Kelly is a single filer and the standard deduction would be $12k not $24k.

      • She clearly stated above that she is a single filer (not married filing jointly) which leaves her with a $12,000 standard deduction in 2018, as she stated. Her math is correct.
        I also am not happy with the loss of the personal exemption and the removal of itemizing. I have a family of 6 and we always have more in itemized expenses (medical, charitable giving, mortgage interest, property tax and more) than our standard deduction was. This is going to be a net loss for us as well on those two items.
        They did double the CTC which will create an additional $4,000 of credits, assuming I don't get phased out again.
        Overall, I think it will help many people but, as Kelly said, many will also end up paying more with the loss of certain deductions.

        • I should clarify something. I don't mean the removal of itemizing but rather the discouragement of itemizing paired with the loss of personal exemptions. This will indeed hit many families like mine that have large itemizing deductions.

  • We will definitely be screwed and paying more in taxes for 2018 tax year. the salt deduction plus mortgage interest is limited to 10 K we had been putting close to 25k on our schedule A itemized deductions to offset our income. the $24000 married filing jointly deduction will lose us a thousand in deduction there which we will start taking instead of using schedule a because of the 10,000 limit. In addition family of five is a $20,200 offset to our income with personal exemptions times 5. Therefore 22000 + 1000 is 23000 more income we will have to pay taxes on next year due to the loss of our personal exemption deduction. In addition our three boys just turned 17 which means we will lose the child tax credit of $2750 which we had used previously to offset our tax liability. I understand this is 3 x $1,000 tax credit but the worksheet reduces it to $2750. We make our money in rental property and had done well in the past although for the last two years we are realizing quite a substantial tax bill compared to years previously with all our depreciation. we make our money in rental property although for the last 2 years we are realizing quite a substantial tax bill compare 2 years previously with all our depreciation. In summary this new tax plan will cause us to pay taxes on an additional $23,000 in income. Please correct me if I am wrong.

  • I am single, not blind, no dependents and 70. It appears the only deductions I will be able to take for 2018 is the standard deduction of 12000 plus the old over 65 single lady deduction of 1600.00 Total deduction of 13600.00.

    I figured out my estimated taxes for 2018...and looks like I just caught a big mistake.
    I gave myself the standard deduction of 12000.00 plus an additional 10000..I guess that was for looks. After going through the calculation again it seems all I can legally squeeze out for deductions is the 13600. What do you think??

    Thank you Marie in VA

    • Don't forget to allow for the lowered federal withholding. The federal taxes withheld will be lower.

  • I have been claiming a single adult dependant who I support 100%. I make $21k/yr. I use the $4k I did get in my tax refund to buy his eyeglasses, clothes, etc. Will I lose that when I file for 2018?

    • Yes, but you will get a standard deduction of $12,000 vs $6,350 that you got in 2017. If you are a W2 employee and have no other itemized expenses, you will be better off by roughly $225 vs 2017.

    • This article in your link is outdated (October 2017), and the new law was sign in December, 2017

  • My clients had been asking for years "Will the Republicans Repeal Obamacare", and my reply was always - "Obamacare is a TAX BILL, the Republicans will have a TAX issue if they pull Obamacare.".. In addition I analyzed the CA & NY Minimum Wage increase laws and the ONLY one's to make BANK on the minimum wage going to $15 are the politicians. The minimum wage increase will suffice to push people off Government subsidized Heallthcare, and the Government reaps in all the extra payroll Employer and employee taxes. This Republican Tax bill is the Equivalent of giving a five year old a lollypop in exchange for a $20 bill... We gave away Huge Tax Write-offs . In addition, while Standard Deductions Increased average $5,600 Filing Single and $11,300 Joint... The Republican Bill REMOVED the Personal Exemptions $4,100 Single , and $8,200 Joint. As Income increases over next few years we are losing losing losing . UNDERSTAND- The 200 lb Gorilla driving Healthcare Reform and a Major contributor to this TAX bill is Medicare Insolvency and the growing Medi-CAID population. We need to demand an AUDIT on where the 7.65% personal FICA TAX and 7.65% Matching Employer FICA taxes have been appropriated over the years for our pensions and Healthcare AC to be in such a mess. If a private entity did to our AC what Government has done, They would be behind bars. What fools we are !

  • Will raising the Federal standard deduction affect real estate investors?

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