7 Tax Breaks Eliminated Or Curtailed
The Tax Cuts and Jobs Act became effective in 2018 and delivered lots of good news, such as curbing of the alternative minimum tax and lowering tax brackets. However, in filing your federal return for the first time under the new rules, be aware that these seven popular tax breaks disappeared or were curtailed.
Personal exemptions. This longstanding break was axed, and for many it won't be missed because of a near-doubling of the standard deduction to $12,000 for individuals, $18,000 for heads of household and $24,000 for joint filers. The personal exemption was $4,056. This was not technically a deduction, which you subtract from your taxable income; as an exemption, it was a dollar-for-dollar reduction of your tax bill. For a single parent with, say, three children—who would get the standard deduction of $18,000—the personal exemption might have been a better deal unless the standard deduction didn't put the parent in a lower tax bracket. Partly offsetting the loss of the personal exemption is the increase of the child tax credit to $2,000 from $1,000.
Unlimited home equity loan interest deduction. Through 2017, you could deduct interest on a loan you took out to buy a boat, fund a vacation or for any endeavor not related to real estate. No more. Now, the loan must be connected to home improvement. What's more, the total of the mortgage and the home equity loan can't be more than $750,000.
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