Where Americans pay the highest and lowest property taxes 01:22 Moving expenses If instead you took out a home equity loan and used the proceeds to improve your existing home, then the interest would be deductible - but only if the loan, when combined with your current mortgage, does not exceed the $750,000 total loan limits under the new rules. The new rules also disallow deducting the interest on home equity loans used in many common transactions.įor example, if you take out a home equity loan on your home and used the proceeds for other purposes, such as college tuition or to pay off credit card debt, then you can't treat the interest on that home equity loan as deductible qualified residence interest. The new tax law generally limits the deductibility of mortgage interest on up to $750,000 of debt used to acquire a home. Also, families will receive higher child tax credits in 2018, so those tax credits may offset the impact of the loss of personal exemptions for families. Starting in 2018, the phase-out for the personal exemption and standard deduction for married couples with adjusted gross income above $313,800 (and singles above $261,500) has been repealed. But in 2018, they can no longer claim the personal deduction, and their standard deduction is $24,000, or lower than the deduction they enjoyed in 2017.īut families may still come out ahead, given that some taxpayers lost deductions if their income exceeded certain thresholds.In 2017, a family of four would have enjoyed a personal exemption of $16,200 ($4,050 x 4) and a standard deduction of $12,700, totaling a combined deduction of $28,900. Families are in a different situation.In this example, the single taxpayer has a larger deduction in 2018. Under the new tax law, her personal deduction is zero in 2018 and her standard deduction is $12,000.She could have taken her standard deduction of $6,350 and a personal deduction of $4,050, totaling $10,400.
Lawmakers say that the doubling of the standard deduction effectively replaced this exemption – but that's not exactly true.
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