US tax changes for 2018

Higher contribution limits for retirement savings

Employees who participate in certain retirement plans ‒ 401(k)s, 403(b)s, most 457 plans and the Thrift Savings plan – will be able to contribute as much as $18,500, a $500 increase from the current $18,000 limit.

Deductible contributions to IRAs

Savers who contribute to individual retirement accounts will have higher income ranges following cost-of-living adjustments. Note that the deduction phases out for individuals and their spouses who are covered by workplace retirement plans.

For single taxpayers, the limit will be $63,000 to $73,000.

For married couples, the phase-out range will vary depending on whether the IRA contributor is covered by a workplace retirement plan or not. When the spouse who is investing has access to an employer plan, the range is $101,000 to $121,000. For individuals who don’t have a retirement plan but are married to someone who does, the phase out has been raised to $189,000 to $199,000.

The phase-out was not adjusted for married individuals who file a separate return and who are covered by a workplace retirement plan. That range is $0 to $10,000.

Contributions to Roth IRAs

For individuals who are single or the heads of their households, the income phase-out has been raised to $120,000 to $135,000. For married couples who file jointly, the range climbs to $189,000 to $199,000.

The phase out was not adjusted for married individuals who file a separate return. That is $0 to $10,000.

Standard deductions

Those who are married and filing jointly will have a standard deduction of $13,000, a $300 raise from $12,700.

Single taxpayers and those who are married and file separately will see their standard deduction rise to $6,500.

For heads of households, the deduction will be $9,550.

Personal exemption

The personal exemption will grow by $100 to $4,150. The phase-out for this exemption begins at income of $266,700, or $320,000 for married couples who file jointly, and phases out completely at $389,200 for individuals and $442,500 for couples who file together.

Top income tax rate

The 39.6 percent tax rate will affect individuals with income over $426,700. Top rate kicks in for married taxpayers who file jointly at $480,050.

Alternative Minimum Tax

The exemption amount will be $55,400 for individuals before the AMT kicks in, and begins to phase out at $123,100. For married couples who file jointly, that will be $86,200, and will begin to phase out at $164,100.

Estate tax

The basic exclusion amount for estates of decedents who die in 2018 will be $5.6 million, up from $5.49 million in 2017.


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