![]() Home Mortgage Interestįurthermore, the deduction for home mortgage interest is changing. This new provision alone will reduce the number of individuals who itemize, particularly for those who live in high income/property tax states, as well as those who own pass-through businesses. For tax years prior to 2018, there was no cap. This includes any combination of state and local sales, income, personal property, and real estate taxes. ![]() State and Local TaxesĪdditionally, the amount of state and local taxes (SALT) that can be deducted as an individual itemized deduction is now capped at $10,000. ![]() However, after the 2018 tax year these tax provisions will expire and the 10%-of-AGI limitation will apply to all taxpayers. Before, if you were under the age of 65 the floor was 10%, but for 20, all taxpayers will be subject to the 7.5% floor. To illustrate: if an individual’s AGI is $100,000, the first $7,500 (7.5% x $100,000) of medical expenses are not eligible to be deducted. The “floor” is a percentage of an individual’s adjusted gross income (“AGI”), and only qualified medical expenses incurred above that floor are deductible. Medical Expensesįor starters, for tax years 20 the “floor” for deducting medical and dental expenses has decreased to 7.5% of adjusted gross income for all taxpayers, not just those ages 65 and older. But for those who will itemize, they will see significant changes pertaining to the types, and amounts, of the deductions being claimed on their personal tax returns. The standard deduction has almost doubled over the 2017 amount, resulting in more individuals claiming the standard deduction. With the passage of the Tax Cuts and Jobs Act (TCJA), the number of individuals who will be itemizing deductions on their personal tax return will significantly decrease.
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