For 9 end-of-year tax planning tips, read our free "Guide to End-of-Year Tax Planning."\r\nRead the Guide.\r\n\r\nThe new tax act, which was signed into law by President Trump on December 22, is the most comprehensive reform of the U.S. tax code in more than 30 years. The passage of the tax reform act will have a significant impact on the tax strategies of many Americans in 2018 and beyond.\r\n\r\nHere are some of the ways that tax reform could affect tax planning for you and your family.\r\nStandard Deduction Raised\r\nTo itemize or not? This is the big question many individuals and families will be facing now that the standard deduction has been drastically increased \u2014 from $13,000 to $24,000 for married couples filing jointly, from $9,350 to $18,000 for heads of household, and from $6,500 to $12,000 for singles.\r\n\r\nWith a higher standard deduction, it may no longer make sense to go to the trouble of itemizing deductions for things like charitable contributions, home mortgage interest or state and local taxes. If the standard deduction is higher than the total of your itemized deductions, you will likely be better off just claiming the standard deduction. Not only could this save you tax dollars, but it will also simplify tax preparation.\r\nSome Itemized Deductions Limited\r\nSpeaking of itemized deductions, some of the most popular deductions have been limited by tax reform. These include a $10,000 limit on deductions for state and local taxes you pay and a limit on deducting mortgage interest to the interest paid on new loans up to $750,000, down from $1 million before tax reform.\r\n\r\nDue to all of these factors, there\u2019s a chance that it might not be as beneficial for you to itemize deductions going forward as it has been in the past. You\u2019ll need to crunch the numbers to determine the best strategy for yourself and your family.\r\nSection 529 Plans Expanded\r\nSection 529 plans have become a popular way for many families to save money for their children\u2019s college educations. Thanks to tax reform, you can now use money you\u2019ve saved in a 529 plan not only for college expenses, but also for private K-12 education expenses (up to $10,000).\r\n\r\nAdditionally, education-related tax breaks like the American Opportunity and Lifetime Learning tax credits \u2014 which are worth up to $2,500 and $2,000 per qualifying student, respectively \u2014 were retained by the tax reform act, so you can continue to factor these into your education savings plans going forward.\r\nEstate Tax Exemption Doubled\r\nThe tax reform act doubled the estate tax exemption from $5.6 million per person ($11.2 million per couple) to $11.2 million per person ($22.4 million per couple). This means that the 40% tax on assets transferred to heirs upon death will now only apply to estates that are larger than these exemption limits.\r\n\r\nAs a result, it will be easier for wealthy individuals and families to pass their assets on to children and grandchildren without the burden of taxation or the need to utilize complicated and expensive trust arrangements.\r\nCapital Gains and Dividends Rates Unchanged\r\nThe tax law retains the existing long-term capital gains and dividends rates of 0%, 15% and 20%. Therefore, your investment tax strategies may not need to change drastically.\r\n\r\nIn 2018, the capital gains and dividend tax brackets are as follows:\r\n\r\n\r\n\r\nBracket\r\nSingle\r\nHead of Household\r\nMarried Filing Jointly\r\n\r\n\r\n0%\r\n$0-38,599\r\n$0-51,699\r\n$0-77,199\r\n\r\n\r\n15%\r\n$38,600-424,799\r\n$51,700-451,399\r\n$77,200-478,999\r\n\r\n\r\n20%\r\n$425,800+\r\n$452,400+\r\n$479,000+\r\n\r\n\r\n\r\nAMT Retained, But Exemptions Increased\r\nThough earlier drafts of the tax reform bill repealed the individual Alternative Minimum Tax (AMT), the final version retained the AMT. But significant increases in the AMT exemptions and income phase-out levels \u2014 which are rising to $500,000 for individuals and $1 million for married couples filing jointly \u2014 will result in far fewer individuals and families having to pay the AMT going forward.\r\nPopular Tax Breaks Preserved\r\nFrom a tax planning perspective, it\u2019s also worth noting that the tax reform act preserved the home sale capital gain exclusion of up to $250,000 for individuals and $500,000 for married couples filing jointly. This means you can still potentially shield profits on qualified home sales up to these amounts from federal income tax.\r\n\r\nAnd the law preserved and even expanded the medical expense itemized deduction. Previously, only medical expenses that exceeded 10% of annual adjusted gross income (AGI) were deductible, but this threshold has been reduced to 7.5% for 2017 and 2018. So if you had major medical expenses last year or will have them this year, you might benefit from this provision.\r\nOur Take\r\nThis is just a brief discussion of some of the potential impacts of the new tax act. Be sure to consult with a tax professional for more details on how tax reform could affect you and your family.\r\n\r\nContact a Financial Advisor\r\n\r\nThis blog is for informational purposes only; we are not in the business of providing tax or legal advice and we generally recommend seeking the advice and counsel of a tax professional before taking any action that may cause a material taxable event.