The 2017 Versus 2018 Tax Tables
| Posted by: James Soller | No Comments
The most significant changes to the 2018 Tax regulations apply to Corporations and to the treatment and taxation of pass-through income. C Corps, S Corps and LLCs are all impacted. Under the Tax Cuts and Jobs Act, C-corps are taxed at a flat rate of 21%—a cut from the previous range of 15%-35%.
The new Section 199A provides both benefits and complexity to business owners. Different qualifications apply to specific industries and incomes (Qualified Business Incomes QBI) to receive all the benefits of 199A. The deduction is phased out for income between $415,000 and $315,000 for Joint Filers and $257,000 and $157,000 if a single filer. Keep in mind that the the computation of the deduction is complex and should be left to a tax expert.
Taxpayers with income above these levels must meet two requirements to qualify for a 199A deduction:
- The income may not be generated by a Specified Service Business; and
- The Qualified Trade or Business generating the income must either pay wages or own property.
A Specified Service Businesses (SSB) is broadly defined as any trade or business involving the performance of services in the fields:
- Health
- Law
- Accounting
- Actuarial Science
- Performing Arts
- Consulting
- Athletics
- Financial Services
- Brokerage Services
- Investing
- Investment Management
- Trading or Dealing in Securities
An SSB is also any trade or business where the principal asset is the reputation or skill of one or more of its owners or employees. We strongly suggest the opinion of a tax expert in determining your participation under 199A.
199A provides up to a 20% discount on pass through income derived from C Corps, S Corps and LLCs. W2 wages are not eligible for the 199Aa discount. The difference in tax rates for C Corps offers additional savings (21% max rate) over S corps depending on how much money is passed through The calculations are complex and in some cases conversion to a C Corp can have tax benefits to the owners. Again your tax expert can help navigate you to the correct financial and business decisions to take full advantage of the new 2018 regulations
Overall, there are plenty of other changes in the tax code between 2017 and 2018 in addition to the corporate tax changes mentioned above. The more you understand the new policies, the better you can prepare yourself and protect your wealth. Below are several tables that outline the updated tax rates and brackets when filing your 2018 returns. We provide a simple breakdown for single taxpayers, married taxpayers, married filing separately, head of household, estates and trusts, Fica, education credits and deductions and miscellaneous provisions. Click here for the PDF version.
| SINGLE TAXPAYERS | |||
| 2018 Tax Rates – Standard Deduction $12,000 | 2017 Tax Rates – Standard Deduction $6,350 | ||
| 10% | 0 to $9,525 | 10% | 0 to $9,325 |
| 12% | $9,525 to $38,700 | 15% | $9,325 to $37,950 |
| 22% | $38,700 to $82,500 | 25% | $37,950 to $91,900 |
| 24% | $82,500 to $157,500 | 28% | $91,900 to $191,650 |
| 32% | $157,500 to $200,000 | 33% | $191,650 to $416,700 |
| 35% | $200,000 to $500,000 | 35% | $416,700 to $418,400 |
| 37% | Over $500,000 | 39.60% | Over $418,400 |
| MARRIED FILING JOINTLY & SURVIVING SPOUSES | |||
| 2018 Tax Rates – Standard Deduction $24,000 | 2017 Tax Rates – Standard Deduction $12,700 | ||
| 10% | 0 to $19,050 | 10% | 0 to $18,650 |
| 12% | $19,050 to $77,400 | 15% | $18,650 to $75,900 |
| 22% | $77,400 to $165,000 | 25% | $75,900 to $153,100 |
| 24% | $165,000 to $315,000 | 28% | $153,100 to $233,350 |
| 32% | $315,000 to $400,000 | 33% | $233,350 to $416,700 |
| 35% | $400,000 to $600,000 | 35% | $416,700 to $470,700 |
| 37% | Over $600,000 | 39.60% | Over $470,700 |
| MARRIED FILING SEPARATELY | |||
| 2018 Tax Rates – Standard Deduction $12,000 | 2017 Tax Rates – Standard Deduction $6,350 | ||
| 10% | 0 to $9,525 | 10% | 0 to $9,325 |
| 12% | $9,525 to $38,700 | 15% | $9,325 to $37,950 |
| 22% | $38,700 to $82,500 | 25% | $37,950 to $76,550 |
| 24% | $82,500 to $157,500 | 28% | $76,550 to $116,675 |
| 32% | $157,500 to $200,000 | 33% | $116,675 to $208,350 |
| 35% | $200,000 to $500,000 | 35% | $208,350 to $235,350 |
| 37% | Over $500,000 | 39.60% | Over $235,350 |
| HEAD OF HOUSEHOLD | |||
| 2018 Tax Rates – Standard Deduction $18,000 | 2017 Tax Rates – Standard Deduction $9,350 | ||
| 10% | 0 to $13,600 | 10% | 0 to $13,350 |
| 12% | $13,600 to $51,800 | 15% | $13,350 to $50,800 |
| 22% | $51,800 to $82,500 | 25% | $50,800 to $131,200 |
| 24% | $82,500 to $157,500 | 28% | $131,200 to $212,500 |
| 32% | $157,500 to $200,000 | 33% | $212,500 to $416,700 |
| 35% | $200,000 to $500,000 | 35% | $416,700 to $444,500 |
| 37% | Over $500,000 | 39.60% | Over $444,500 |
| ESTATES & TRUSTS | |||
| 2018 Tax Rates | 2017 Tax Rates | ||
| 10% | 0 to $2,550 | 15% | 0 to $2,550 |
| 24% | $2,550 to $9,150 | 25% | $2,550 to $6,000 |
| 35% | $9,150 to $12,500 | 28% | $6,000 to $9,150 |
| 37% | Over $12,500 | 33% | $9,150 to $12,500 |
| N/A | N/A | 39.60% | Over $12,500 |
| FICA (SOCIAL SECURITY & MEDICARE) | ||
| FICA Tax | 2018 | 2017 |
| Social Security Tax Rate: Employers | 6.2% | 6.2% |
| Social Security Tax Rate: Employees | 6.2% | 6.2% |
| Social Security Tax Rate: Self-Employed | 15.3% | 15.3% |
| Maximum Taxable Earnings | $128,400 | $127,200 |
| Medicare Base Salary | Unlimited | Unlimited |
| Medicare Tax Rate | 1.5% | 1.5% |
| Additional Medicare Tax for income above $200,000 (single filers) or $250,000 (joint filers) | 0.9% | 0.9% |
| Medicare tax on net investment income ($200,000 single filers, $250,000 joint filers) | 3.8% | 3.8% |
| EDUCATION CREDITS & DEDUCTIONS | ||
| Credit / Deduction | 2018 | 2017 |
| American Opportunity Credit (Hope) | 2500 | 2500 |
| Lifetime Learning Credit | 2000 | 2000 |
| Student Loan Interest Deduction | 2500 | 2500 |
| Coverdell Education Savings Contribution | 2000 | 2000 |
| MISCELLANEOUS PROVISIONS | |||
| 2018 | 2017 | ||
| N/A – No longer exists | N/A | Personal Exemption | $4,050 |
| Business expensing limit: Cap on equipment purchases | $2,500,000 | Business expensing limit: Cap on equipment purchases | $2,030,000 |
| Business expensing limit: New and Used Equipment and Software | $1,000,000 | Business expensing limit: New and Used Equipment and Software | $510,000 |
| Prior-year safe harbor for estimated taxes of higher-income | 110% of your 2018 tax liability | Prior-year safe harbor for estimated taxes of higher-income | 110% of your 2017 tax liability |
| Standard mileage rate for business driving | 54.5 cents | Standard mileage rate for business driving | 53.5 cents |
| Standard mileage rate for medical/moving driving | 18 cents | Standard mileage rate for medical/moving driving | 17 cents |
| Standard mileage rate for charitable driving | 14 cents | Standard mileage rate for charitable driving | 14 cents |
| Child Tax Credit | $2,000 | Child Tax Credit | $1,000 |
| Unearned income maximum for children under 19 before kiddie tax applies | $1,050 | Unearned income maximum for children under 19 before kiddie tax applies | $1,050 |
| Maximum capital gains tax rate for taxpayers with income up to $51,700 for single filers, $77,200 for married filing jointly | 0% | Maximum capital gains tax rate for taxpayers in the 10% or 15% bracket | 0% |
| Maximum capital gains tax rate for taxpayers with income above $51,700 for single filers, $77,200 for married filing jointly | 15% | Maximum capital gains tax rate for taxpayers above the 15% bracket but below the 39.6% bracket | 15% |
| Maximum capital gains tax rate for taxpayers with income above $425,800 for single filers, $479,000 for married filing jointly | 20% | Maximum capital gains tax rate for taxpayers in the 39.6% bracket | 20% |
| Capital gains tax rate for unrecaptured Sec. 1250 gains | 25% | Capital gains tax rate for unrecaptured Sec. 1250 gains | 25% |
| Capital gains tax rate on collectibles | 28% | Capital gains tax rate on collectibles | 28% |
| Maximum contribution for Traditional/Roth IRA | $5,500 if under age 50 $6,500 if 50 or older | Maximum contribution for Traditional/Roth IRA | $5,500 if under age 50 $6,500 if 50 or older |
| Maximum employee contribution to SIMPLE IRA | $12,500 if under age 50 $15,500 if 50 or older | Maximum employee contribution to SIMPLE IRA | $12,500 if under age 50 $15,500 if 50 or older |
| Maximum Contribution to SEP IRA | 25% of eligible compensation up to $55,000 | Maximum Contribution to SEP IRA | 25% of eligible compensation up to $54,000 |
| 401(k) maximum employee contribution limit | $18,500 if under age 50 $24,500 if 50 or older | 401(k) maximum employee contribution limit | $18,000 if under age 50 $24,000 if 50 or older |
| Estate tax exemption | $11,200,000 | Estate tax exemption | $5,490,000 |
| Annual Exclusion for Gifts | $15,000 | Annual Exclusion for Gifts | $14,000 |