Individuals

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Tax Reform Provisions that Affect Individuals

Check this page for updates and resources to learn how the Tax Cuts and Jobs Act (TCJA) affects individual taxpayers.

​Withholding

The IRS encourages several key groups of taxpayers to perform a “paycheck checkup” to check if they are having their employer withhold the right amount of tax for their situation, following recent tax-law changes. It’s especially important for certain people, to check their withholding. They are people who:

  • Belong to a two-income family.
  • Work two or more jobs or only work for part of the year.
  • Have children and claim credits such as the Child Tax Credit.
  • Have older dependents, including children age 17 or older.
  • Itemized deductions on their 2017 tax returns.
  • Earn high incomes and have more complex tax returns.
  • Received large tax refunds or had large tax bills for 2017.

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A new version of Form W-4 is available to help taxpayers check their 2018 tax withholding following passage of the TCJA.

If changes to withholding should be made, the Withholding Estimator gives employees the information they need to fill out a new Form W-4, Employee’s Withholding Allowance Certificate. Employees will submit the completed W-4 to their employer.

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New withholding tables reflect changes in tax rates and tax brackets, the increased standard deduction and the repeal of personal exemptions, among other things.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

​Credits

For 2018, the maximum credit has increased and the income threshold at which the credit begins to phase out has increased.

Each child must have a Social Security number before the due date of your 2018 return (including extensions) to be claimed as a qualifying child for the child tax credit or additional child tax credit.

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Deductions

Personal exemption deductions for yourself, your spouse, or your dependents have been eliminated beginning after December 31, 2017, and before January 1, 2026.

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Deduction for personal casualty and theft losses suspended (unless incurred in federally-declared disaster area)

Limitations to the deduction for state and local taxes

Limitations to the deduction for home mortgage interest in certain cases

Eliminating most miscellaneous itemized deductions such as:

  • Deductions for employee business expenses
  • Tax preparation fees
  • Investment expenses, including investment management fees
  • Employment related educational expenses
  • Job search expenses
  • Hobby losses
  • Safe deposit box fees
  • Investment expenses from pass-through entities

Eliminated the limitation on itemized deductions for certain high-income taxpayers. 

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The deductibility of state and local tax payments for federal income tax purposes is now limited to $10,000 a calendar year.

A taxpayer who makes payments or transfers property to an entity eligible to receive tax deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive. 

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The deduction for moving expenses has been suspended for most taxpayers for tax years beginning after Dec. 31, 2017 through Jan. 1, 2026. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.

However, employers may exclude from wages any 2018 reimbursements to or payments on behalf of employees for moving expenses incurred for a move that took place prior to January 1, 2018, and which would have been deductible had they been paid prior to that date. See Notice 2018-75 for more information.

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Some laws regarding depreciation deductions have changed. A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million.

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Alimony and separate maintenance payments are no longer deductible for any agreement executed or modified after December 31, 2018.

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The FAQ below addresses the deductibility of attorney’s fees related to a settlement or payment when the settlement or payment is related to a sexual harassment or sexual abuse claim and is subject to a nondisclosure agreement.

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U.S. Armed Forces members

U.S. Armed Forces members who served in the Sinai Peninsula of Egypt may qualify for combat zone tax benefits retroactive to June 2015.

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Members of the Armed Forces on active duty are still able to deduct their moving expenses. From 2018 through 2025, most taxpayers can no longer deduct your moving expenses unless they are a member of the Armed Forces on active duty.

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Savings Plans

Tax law changes enable eligible people with Achieving a Better Life Experience (ABLE) accounts to put more money into their ABLE account and possibly qualify for the Saver's Credit. 

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A change in the inflation adjustment calculations for 2018 reduced the maximum deductible HSA contribution for taxpayers with family coverage under an HDHP by $50, to $6,850.

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Taxpayers, beneficiaries, and administrators of 529 and Achieving a Better Life Experience (ABLE) programs can rely on the rules described in Notice 2018-58 PDF  until the Treasury Department and IRS issue regulations clarifying these changes.

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Other Information

IRS has issued final regulations  expanding the long-standing paid preparer due diligence requirement to include individual income tax returns claiming the head of household filing status.

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The tax year 2018 annual inflation adjustments have been updated to reflect changes from the TCJA.

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The TCJA made several changes to the way income from foreign holdings are taxed. See International Taxpayers and Businesses for more information.

Opportunity Zones are an economic development tool—that is, they are designed to spur economic development and job creation in distressed communities. Opportunity Zones are designed to spur economic development by providing tax benefits to investors.

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Individuals and businesses have additional time to file an administrative claim or to bring a civil action for wrongful levy or seizure. The TCJA extended the time limit for filing an administrative claim and for bringing a suit for wrongful levy from nine months to two years.

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The TCJA temporarily increased the basic exclusion amount from $5 million to $10 million for tax years 2018 through 2025, with both dollar amounts adjusted for inflation.

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The Taxpayer Advocate Service’s also offers a Tax Reform Changes website, available in English and Spanish, that explains what is changing and what is not this year for individuals. Its interactive information can be reviewed by tax topic or line by line using a 2017 Form 1040 in addition to references to the newly published 2018 Form 1040. Both methods include scenarios to describe how the new law may affect you. You can also sign up to receive email notifications as the website is updated with new tax law information.

Page Last Reviewed or Updated: 18-Nov-2024