Now that tax season has begun, it is more important than ever to understand the relevant points of the recently-passed tax overhaul. Last week, our blog examined five significant piece of information from the new tax reform. This week, we will conclude our examination by discussing five more changes to the tax code that you should know about.
6. Child tax credit doubles
The income threshold for taxpayers who can claim the child tax credit has increased to $200,000 for single parents and $400,000 for married couples. If you have children under the age of 17, your child tax credit will double to $2,000. This is a significant boon to high-income parents who can now claim the full credit.
7. Credit for non-child dependents
If you have a dependent who is not a child, you will be eligible for a new tax credit. Examples of a non-child dependent include a college-age child, a disabled adult child or an elderly parent. Parents may now claim a $500 credit for each non-child dependent that they are supporting.
8. Lower threshold for mortgage deductions
There could be some bad news for homeowners who will take out a mortgage on a first or second home. Rather than deducting the interest on debt that is up to $1,000,000, you may now only deduct the interest on debt up to $750,000. The new bill also eliminates the deduction for home equity loan interest.
9. Higher estate-tax exemptions
The estate tax was not entirely repealed, but the vast majority of Americans will be exempt from it. As long as your estate is less than $11.2 million, it will not incur estate taxes. For couples, the limit will be $22.4 million. These exemptions are nearly double the previous limits.
10. No more health insurance mandate
The new tax overhaul also does away with the previous administration’s mandate to purchase health insurance. The health insurance mandate has long been a target for conservative administrators. Though banishing the mandate will save American households some money on insurance premiums, it will likely increase the federal government’s costs for insurance subsidies.