IRS Announces 2018 Tax and Retirement Updates
The IRS recently announced the 2018 changes to tax benefits. Some areas saw slight increases while others remain unchanged. A few of the highlights include:
Retirement Accounts Changes
- The contribution limit to 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan increased from $18,000 to $18,500.
- The catch-up contribution for those age 50 and over remained at $6,000, making the contribution limit for those age 50 and over $24,500 for 2018.
- The limit on annual contributions to an IRA remains unchanged at $5,500 and $6,500 for those over age 50.
- The income ranges for determining deductibility of contributions to traditional IRAs and to contribute to Roth IRAs all increased slightly in 2018.
General Income Tax Changes
- The standard deduction and personal exemptions for taxpayers rose slightly. For example, a married couple filing jointly can claim a standard deduction of $13,000 (a $300 increase) and a personal exemption of $4,150 each (a $100 increase).
- Income limits for determining tax rates increased slightly. For example, the top 39.6 percent tax rate effects single taxpayers with income exceeding $426,700 and $480,050 for married taxpayers filing jointly. These are up from $418,400 and $470,700, respectively.
- The limitation on itemized deductions rose slightly as well.
Estate & Gift Changes
- The estates of those who die in 2018 will have a basic exclusion amount of $5,600,000 (up from $5,490,000).
- The annual exclusion for gifts increased to $15,000 (up from $14,000).
For more details on these provisions, please see the following IRS News Releases:
As you can see, most of these slight adjustments to the tax laws for 2018 are taxpayer-friendly. Please feel free to reach out to any member of the Bartlett Wealth Management Team for any questions or help planning for the 2018 tax year.
