Individual income tax changes for calendar year 2019

The Tax Cuts and Jobs Act passed in December 2017 is a temporary tax law with provisions that affect calendar years 2018 through 2025. Midway through the calendar year 2018 filing season many clients are starting to ask what they need to know, not only about the effect on their calendar year 2018 US income taxes, but also the effect on their calendar year 2019 US income taxes. Below are some highlights for calendar year 2019.

Standard Deduction
The calendar year 2019 standard deduction will increase to $12,200 for single/married filing separately, $24,400 for married filing jointly and $18,350 for heads of household.

Itemized Deductions – The SALT deduction
The limitation for the state and local tax deduction remains capped at $5,000 for singles/married filing separately and $10,000 for married filing jointly.

Itemized Deductions – Mortgage Interest
The mortgage interest deduction remains limited to the first $750,000 of acquisition indebtedness for mortgages acquired after December 17, 2017 and before January 1, 2026. Acquisition indebtedness is defined as debt for the construction, improvement or purchase of a primary or secondary residence.

Itemized Deductions – Medical Expenses
Beginning January 1, 2019 the floor for the medical expense deduction is 10% of your adjusted gross income. This is increased from 7.5% for calendar year 2018.

Affordable Care Act Individual Mandate Repealed
The TCJA repealed, beginning January 1, 2019, the mandate that requires individuals purchase health insurance or pay a penalty.

Alternative Income Tax
The alternative income tax exemption increases in calendar year 2019 to $71,700 for singles and $111,700 for married filing jointly. The alternative minimum tax exemption for calendar year 2019 is alternative minimum taxable income of $510,300 for unmarried individuals and $1,020,600 for married filing jointly.