Page 169 - TrumpsEconEra_Flat

Trump’s Economic Era

If you buy a home between now and 2026, you
can deduct the interest on up to $750,000. The new
legislation wiped out the deduction for home equity
debt, including on existing loans, beginning in 2018.
By 2019, only medical expenses that exceed 10% of
adjusted gross income are deductible. The new law
preserves all the most charitable donation deductions,
but fewer people will claim this deduction because of
the higher standard deduction.

If you are in a high-income household in a
high-tax state, with a mortgage and high property taxes,
these changes could end up increasing your tax liability.
However, if you do not itemize your deductions these
changes will not be an issue, and the increased standard
deduction should end up benefiting you. About 70% of
taxpayers claim the standard deduction, so most
taxpayers claiming this deduction likely will benefit
from this change. If you are a low or middle-income
household, the new standard deduction combined with
an increased child tax credit should lower your tax bill.

The Alternative Minimum Tax

The Alternative Minimum Tax (AMT) is a
parallel tax system and comes with a different set of
rates and deduction rules. Taxpayers who qualify pay it
only if their AMT tax amount is higher than their
regular taxes. Some deductions still exist with the
AMT, including those for mortgage interest and
charitable donations. Some of the lost tax breaks are
state and local income taxes and property taxes, child
tax credits.

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