Key Federal Tax Figures for 2018
There are several points of interest that emerge from a review of the 2018 Key Federal Tax Figures summary. Here is a brief digest of items of note.
Increase in Standard Deduction; Elimination of the Personal Exemption
The tax reform legislation enacted in December 2017 nearly doubled the standard deduction from $12,700 for a married couple filing a joint return to $24,000. Similar increases occurred for heads of household and single individuals. In contrast, the legislation eliminated the personal exemption. The exemption had been scheduled to increase to $4,150, but now is nonexistent.
Automobile Mileage Rates
The tax-free mileage rate for business use of a vehicle increased to 54.5 cents per mile from 53.5 cents per mile. Similarly, the tax deductible mileage rate for medical mileage increased to 18 cents per mile from 17 cents per mile while the mileage rate for charitable mileage remained unchanged at 14 cents per mile. Note that with the suspension of the moving expense deduction, there is no mileage reimbursement rate for moving mileage.
Other Inflation Adjustments for 2018
Inflation adjustments affect many areas, but not everything. Examine the specific issues that affect your organization carefully. Some examples:
|In 2017 and Returns for 2017||In 2018 and Returns for 2018|
|Foreign earned income exclusion||$102,100||$103,900|
|OASDI maximum wage base||$127,200||$128,400|
|Maximum annual contribution to defined contribution plan||$54,000||$55,000|
|Maximum salary deduction for 401(k)/403(b)||$18,000||$18,500|
|401(k)/403(b) “catch-up” limit||$6,000||$6,000|
|IRA contribution limit||$5,500||$5,500|
|IRA over 50 “catch-up” limit||$1,000||$1,000|
|Highly compensated employee limit||$120,000||$120,000|
|Annual gift tax exclusion amount||$14,000||$15,000|
Please contact us with any questions.
*Note: this post was updated on March 22, 2018 to reflect adjusted figures released by the IRS.Sign up for e-news and alerts