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Two significant changes were made to the AMT for the years 2018 through 2025. All of the changes will be subject to inflation adjustment in years after 2018.

a. The exemption amounts that were scheduled to be $86,200 for joint filers (one-half of that amount for separate filers) and $55,400 for unmarried taxpayers, for 2018, have been increased to $109,400 for joint filers ($54,700 for separate filers) and $70,300 for all others.

b. The AMTI threshold, above which the exemption is phased out $1 for every $4 of excess, has been increased to $1,000,000 for married taxpayers filing jointly and $500,000 for all others. These amounts were scheduled to be $164,100 for joint filers, $82,050 for separate filers and $123,100 for all other taxpayers.

100% additional first-year bonus depreciation is allowed for qualified property acquired and placed into service after September 27, 2017 and before January 1, 2023.

The new rules eliminate the requirement that the original use of the property commence with the taxpayer. As such, bonus depreciation is available for new or used property.

Taxpayers have a right to elect 50% bonus depreciation for property placed into service after September 27, 2017 during the first tax year that ends after September 27, 2017.
In the years that follow the bonus depreciation percentage will diminish. i. For property placed into service after December 31, 2022 and before January 1, 2024 bonus depreciation is 80%.
ii. For property placed into service after December 31, 2023 and before January 1, 2025 bonus depreciation is 60%.
iii. For property placed into service after December 31, 2024 and before January 1, 2026 bonus depreciation is 40%.
iv. For property placed into service after December 31, 2025 and before January 1, 2027 bonus depreciation is 20%.

Personal casualty losses occurring in a tax year beginning after December 31, 2017 but before January 1, 2026 are not deductible, unless the loss is incurred as a result of a federally-declared disaster

Long-Term Capital Gains (and Qualified Dividends) have been subject to special maximum tax rates. The Act generally retains the maximum tax rate structure.
For 2018 the 15% rate applies once the following income limits are met: a. Joint returns - $77,200
b. Head of Household returns - $51,700
c. Single returns - $38,600
d. Married Separate returns - $38,600
e. Trusts and Estates - $2,600

For 2018 the 20% rate will apply to long-term capital gains and qualified dividends above these income levels:
a. Joint returns - $479,000
b. Head of Household returns - $452,400
d. Married Separate returns - $239,500
e. Trusts and Estates - $12,700

Prior to the Act, a 0% capital gain rate applied to capital gains where the taxpayer is paying in the 10% or 15% rate on ordinary income; a 15% capital gain rate applied to any taxpayer paying any other rate below 39.6%; and a 20% rate applied to the high-income taxpayers paying 39.6% on ordinary income.

One of the changes imposed by the Tax Cuts and Jobs Act is the creation of new Section 199A, “Qualified Business Income”.
This new code section, non-corporate taxpayers (including trusts and estates) that have Qualified Business Income (“QBI”) from a partnership, S Corporation or sole proprietorship can take a deduction of up to 20% of the QBI.

QBI is generally defined as the net amount of income, gain, deduction and loss relating to a qualified trade or business and effectively connected to the conduct of the trade or business within the United States.

If the net amount is less than zero, the amount is treated as a loss from a qualified trade or business in the succeeding tax year.

Certain types of income are specifically excluded from being treated as QBI, and thus not eligible for the deduction. Investment income along with reasonable compensation payments, guaranteed payment to a partner for services rendered and payments for services to partners not acting in their capacity as partners are not included.

The deduction is a deduction from AGI in arriving at Taxable Income. It is not an or above the line deduction.

A limitation is imposed on income from certain specified service businesses, including businesses that perform services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investing and investment management, trading or dealing with securities and any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.

Specifically exempt from the definition of service business are engineering and architectural services.

For pass-through income from a service business, a limitation phases in when the owner’s taxable income (from all sources) exceeds $157,500 for single taxpayers and $315,000 for married taxpayers filing joint returns and is completely phased-out when taxable income exceeds $207,500 and $415,000 respectively.

A second limitation applies based upon W-2 wages and capital of a trade or business. In general, the deduction cannot exceed the greater of 50% of the W-2 wages of the business; or the sum of 25% of the W-2 wages paid plus 2.5% of the unadjusted basis, immediately after acquisition, of all “qualified property”.

Qualified property is defined as all tangible, depreciable property held by and used by the business at the close of the year.

The limitation based on W-2 wages and capital does not apply to any passthru entity owner with taxable income that does not exceed the $157,500/$315,000 threshold. Once income exceeds this amount, the W2/Capital limitation phases in and applies fully once the taxpayer’s taxable income exceeds the $207,500/$415,000 threshold

For 2018, the maximum credit amount is $3,461 for one qualifying child, $5,716 for two qualifying children, $6,431 for three or more qualifying children, and $519 for taxpayers who have no qualifying child. The phaseout ranges for the credit have been adjusted for inflation

The IRS standard business mileage rate for 2018 is 54.5 cents a mile
.
The rate for medical expense and moving expense for certain military personnel deductions is 18 cents a mile.

For charitable volunteers the mileage rate is unchanged at 14 cents a mile.

Pursuant to the Act, for tax years beginning after December 31, 2017 and before January 1, 2026, a deduction will only be allowed for interest on a debt that qualifies as Acquisition Indebtedness. No deduction will be allowed for Home Equity debt.

In addition, the Act reduces the amount of eligible Acquisition Indebtedness borrowing to $750,000 for any debt incurred on or after December 15, 2017.

A taxpayer who entered into a binding contract before December 15, 2017 to close on the purchase of a residence before January 1, 2018, and who actually closes on the acquisition before April 1, 2018, shall be considered to have incurred the Acquisition Indebtedness before December 15, 2017.

ii. The old Acquisition Indebtedness limits continue to apply to taxpayers who refinance existing Acquisition Indebtedness as long as the indebtedness resulting from the refinancing does not exceed the amount of the original debt.

For 2017, the deduction for Qualified Residence Interest was limited to interest paid on up to $1,000,000 of borrowing that qualified as “Acquisition Indebtedness” and up to $100,000 of borrowing that qualifies as “Home Equity Indebtedness”.
Acquisition Indebtedness being defined as debt incurred to acquire, construct or substantially improve a principal residence or a second home, with no restriction on the use of Home Equity Indebtedness.

The Act increases the base standard deduction from the inflation adjusted levels that applied in 2017 to:

$12,000 for Single, Qualifying widower and Married filing separately taxpayers.

$24,000 for married taxpayers filing Joint returns,

$18,000 for taxpayers filing as Head of Household.

The additional standard deduction available to taxpayers who are age 65 or older and or blind remain unchanged.
For 2018 the additional amount is $1,300 for married taxpayers and $1,600 for unmarried taxpayers.

The combination of residential property taxes and Income or sales taxes is capped at $10,000.

Property taxes remain fully deductible for taxpayers in a business or for-profit activity, so taxes paid on rental realty can be taken in full on Schedule E.