I have to admit, I dreaded reading about and listening to all the commotion in 2018 about the new tax reforms. It was nerve-racking. But now that the regulations are in effect, I have dedicated some time to learning about these changes and to figuring out how they impact my clients and myself. Below are the eight most relevant tax law changes.

1. Increased Standard Deduction

The standard deduction was increased to $12,000 for single taxpayers (up from $6,350 in 2017) and to $24,000 for taxpayers who are married filing jointly (up from $12,700 in 2017).

2. Elimination of Personal Exemptions

You can forget about the race to find dependents to claim on your tax return. For example, if you were supporting your brother and getting a tax saving when claiming him on your return, that will no longer be an incentive to continue supporting him. Starting in 2018, the previous personal exemptions of $4,050 each for yourself and your dependents have been eliminated.

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8 Top Tax Law Changes and How They’ll Affect You. Don't let your taxes bite you in the butt later. Make sure you know how the tax law changes will affect you before you miss something. #taxes #taxestips #tax3. Higher Child Tax Credit and Increased Income Phaseout Threshold

The child tax credit was increased from $1,000 to $2,000 in 2018. Meanwhile, the phaseout income limits were increased from $110,000 to $400,000 for married filing jointly and from $75,000 to $200,000 for single taxpayers. Just when I would have been able to qualify for this credit, one of my sons turned 17!

4. A Decrease in the Amount of Mortgage Eligible for Interest Deduction

For mortgages issued on or after Dec. 15, 2017, you can only take the mortgage interest deduction on mortgage amounts of up to $750,000. This was lowered from $1,000,000 prior to Dec. 15, 2017.

5. Lower State and Local Tax (SALT) Deduction

Double ouch! This one hurts me personally. Starting in 2018, the SALT deduction for property and income tax is limited to $10,000. This is down from no limit in prior years.

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 6. The Most Welcomed 20 Percent Pass-Through Business Deduction

Taxpayers who own sole proprietorships, LLCs, partnerships, and S corporations might qualify for a 20 percent deduction of their pass-through income from these businesses.

Pass-through income refers to non-W-2 income generated from the business. For example, if your business generates $50,000 in profits after subtracting all expenses (including your W-2 salary), this $50,000 is treated as pass-through income in your tax return.

That money is eligible for the 20 percent deduction. But there are income limits on this deduction for professional services firms.

Seek the guidance of a tax professional for assistance with this particular aspect of your tax return.

7. Bye-Bye, Miscellaneous Deductions

If you, like me, took advantage of the moving and unreimbursed employee expense deductions in prior years, you will need to do some planning next time you consider moving for work or spending your own money to benefit your employer.

Starting in 2018, the following expenses are no longer deductible: casualty and theft losses, unreimbursed employee expenses, tax preparation expenses, moving expenses.

8. Calculator, Please!

Many of us will need to brush up our math skills. I love numbers, but this is a little more than what I asked for. First, with the increased standard deduction and the decrease in allowed itemized deductions (hint: SALT), many of us will find ourselves trying to figure out whether to even bother gathering and calculating itemizable deductions.

Second, we can get into the game of planning when to incur those itemizable expenses in an attempt to bulk more of them into a given year and reduce them in another. This will give us the ability to claim the standard deduction one year, but potentially benefit from itemizing deductions in another.

Lastly, for the professional services firms with phaseout income threshold for the 20 percent deductions, I expect we will look for strategies to legally push income to future years in order to fall within the threshold for the deduction.

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The Bottom Line on the Tax Law Changes

This will definitely be an interesting tax season. I can already picture the  many tax conversations I will be having over dinner and other gatherings with family, friends, and especially my CPA colleagues.

Disclosure: I am an individual taxpayer (surprise!), a small-business owner, and in the middle-class income level. Although these categories might cover a significant percentage of the population, they might also create a biased perspective in this article.