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Never Mind Tax Reform — What’s Different When I File This Year?

January 22, 2018
Income Taxes, Personal Taxes, Taxes
Never Mind Tax Reform — What's Different When I File This Year?
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Much of the conversation around taxes the past few months has been about the sweeping changes to the tax code that President Trump signed into law just before the holidays. But here’s the thing: Most of those rules took effect Jan. 1 — the start of the 2018 tax year. The tax return you have to file by April 17, however, is for the 2017 tax year.

So before the big changes, here are some littler ones — the tinkering and adjusting that the IRS does each year — that you should know about as your W-2s and 1099s start arriving.

Tax brackets and tax rates

The seven tax rates are what they have been the past few years — 10%, 15%, 25%, 28%, 33%, 35% and 39.6% — but the thresholds have been adjusted:

2017 Federal Income Tax Brackets

Tax rateSingleMarried, filing jointlyMarried, filing separatelyHead of household
10%$0 to $9,325$0 to $18,650$0 to $9,325$0 to $13,350
15%$9,326 to $37,950$18,651 to $75,900$9,326 to $37,950$13,351 to $50,800
25%$37,951 to $91,900$75,901 to $153,100$37,951 to $76,550$50,801 to $131,200
28%$91,901 to $191,650$153,101 to $233,350$76,551 to $116,675$131,201 to $212,500
33%$191,651 to $416,700$233,351 to $416,700$116,676 to $208,350$212,501 to $416,700
35%$416,701 to $418,400$416,701 to $470,700$208,351 to $235,350$416,701 to $444,550
39.6%$418,401 or more$470,701 or more$235,351 or more$444,551 or more

Standard deduction

The standard deduction for single taxpayers and married couples filing separately is $6,350. For married couples filing jointly, it’s $12,700. And for heads of households, it is $9,350. (Go here for help deciding whether to itemize or take the standard deduction.)

Filing statusStandard deduction amount
Single$6,350
Married, filing jointly$12,700
Head of household$9,350
Married, filing separately$6,350

The standard deduction is $1,250 higher ($1,550 if unmarried and not a surviving spouse) for those who are 65 and over or blind. If someone can claim you as a dependent, you get a smaller standard deduction.

Personal exemption

The personal exemption is the same in 2017 as it was in 2016: $4,050 per person. However, not everyone can take the personal exemption; it phases out depending on your adjusted gross income. The thresholds for those phaseouts have been adjusted:

Filing status2017 personal exemption starts to phase out once AGI hits:2017 personal exemption is unavailable once AGI hits:
Single$261,500$384,000
Married, filing jointly$313,800$436,300
Head of household$287,650$410,150
Married, filing separately$156,900$218,150

Retirement plan contribution and income limits

“A lot of people don’t know that they have until [the April filing deadline] to make IRA contributions, and have that be deductible for the prior year,” says Mike Pine, a certified public accountant at Pine & Company CPAs in Keller, Texas.

In 2017, the limit on annual IRA contributions remains the same: $5,500 ($6,500 if you’re 50 or older). There are two kinds of IRAs — traditional and Roth — and while their differences are many, one that matters here is that contributions to a traditional IRA can be tax-deductible.

But that deduction phases out at higher incomes. If you or your spouse were covered by a retirement plan at work, the deduction also could be lower. If you (and your spouse, if you have one) aren’t covered by a retirement plan, the phaseouts below don’t apply:

2017 Traditional IRA deduction rules

Filing status2017 modified AGITax deduction
Married filing jointly or qualifying widow or widower
  • If you're covered by a workplace retirement plan: Less than $99,000

  • If your spouse is covered: Less than $186,000
Full deduction up to contribution limit
  • If you're covered by a workplace retirement plan: Between $99,000 and $118,999

  • If your spouse is covered: Between $186,000 and $195,999
Partial deduction
  • If you're covered by a workplace retirement plan: $119,000 or more

  • If your spouse is covered: $196,000 or more
No deduction
Single or head of household$62,000 or lessFull deduction up to contribution limit
More than $62,000 but less than $72,000Partial deduction
$72,000 or moreNo deduction
Married filing separatelyIf you or your spouse is covered by a workplace retirement plan: Less than $10,000Partial deduction
If you or your spouse is covered: $10,000 or moreNo deduction

Student loan interest deduction

The student loan interest deduction lets you subtract up to $2,500 of interest payments from your taxable income if you make less than a certain amount. Those income phaseouts changed for people filing joint returns for 2017:

Deduction starts to phase out once modified AGI hits$65,000 ($135,000 married filing jointly)
Deduction unavailable once modified AGI hits$80,000 ($165,000 married filing jointly)

Earned Income Tax Credit

The EITC credit is intended to reduce or eliminate the tax paid by low- and moderate-income wage earners (go here for more on how it works). Below are the maximum credits available, plus the max you can earn before losing the benefit altogether.

Number of children you claimMax earnings
single filers can have
Max earnings
married filers can have
Max EITC credit you can get
0$15,010$20,600$510
1$39,617$45,207$3,400
2$45,007$50,597$5,616
3 or more$48,340$53,930$6,318

Limit on itemized deductions

You may not be able to deduct 100% of your taxes paid, interest paid, charitable donations, job expenses and other deductions if your adjusted gross income is above a certain level. In 2017, those thresholds increased. (Note that some deductions aren’t subject to these limits, meaning you can take the deduction regardless of AGI as long as you qualify.)

Filing statusAGI threshold
Single$261,500
Married, filing jointly$313,800
Head of household$287,650
Married, filing separately$156,900

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