20 THE QUEENS COURIER • SEPTEMBER 28, 2017 FOR BREAKING NEWS VISIT WWW.QNS.COM
Tax Experts Predict Cuts for 2018: Estimated Tax Brackets
BY JOHN SAVIGNANO, CPA
Bloomberg BNA opened a window
onto next year’s tax planning landscape
with the release of its 2018 Projected Tax
Rates, a detailed and comprehensive projection
of inflation-adjusted tax items
based on changes in the consumer price
index (CPI), which were released today
by the U.S. Bureau of Labor Statistics. The
projections provide early notice of the
amount of tax savings that will be realized
by taxpayers as a result of increases
to standard deduction amounts, upward
adjustments to tax brackets, and increases
in hundreds of other key thresholds.
In 2018, Bloomberg BNA forecasts the
first increase in the annual gift tax exclusion
in five years, from $14,000 to $15,000.
“While the IRS won’t announce the
inflation adjustments for next year for
some time, our projections help taxpayers
and tax planners get a jump start on
the 2018 tax planning season by allowing
them to more accurately estimate their
tax liabilities for the upcoming year,” said
George Farrah, Bloomberg BNA Tax &
Accounting Editorial Director. “As part
of their 2017 year-end review, taxpayers
should evaluate their wealth transfer
strategies to fully utilize the higher
exclusion in 2018. Many taxpayers will
slip into a lower tax rate in 2018 because
of increases in the tax brackets. The standard
deduction and personal exemption
amounts will also increase, offering tax
relief to many taxpayers due to inflation.”
The Internal Revenue Service is expected
to publish its official statement of 2018
inflation-adjusted amounts in a revenue
procedure later this year.
Retirement Savings Accounts
Traditional and Roth IRAs provide
tax advantages for retirement savings.
Contributions to a traditional IRA are
deductible in the year made, and distributions
are taxed. Contributions to a Roth
IRA, on the other hand, are not deductible
but distributions are received free of
tax. For 2018, Bloomberg BNA projects
the maximum contribution limit for traditional
and Roth IRAs to be $5,500 for
individuals under age 50 and $6,500 for
individuals age 50 and above. Projected
amounts for other savings vehicles are
included in the full report.
Individual Income Tax Brackets
Because a higher Consumer Price
Index (CPI) pushes the ranges of the
income brackets upward and also
increases the standard deduction and
exemption amounts, the taxes due on the
same income decrease from year to year.
For example, suppose married taxpayers
filing jointly compute tax on $237,000.
In 2017, they were in the 33% bracket
and paid $53,427 in tax. In 2018, the
brackets are adjusted for inflation, and
our taxpayers are now in the lower 28%
bracket and will pay $52,983 in tax, “saving”
$444 compared to 2017.
High-income taxpayers will enjoy a
measure of relief in 2018 as well, because
the top 39.6% tax bracket is projected to
begin at $480,050 for married taxpayers
filing joint returns and at $426,700 for
unmarried individuals. This represents
an increase from $470,700 and $418,400,
respectively in 2017.
Bloomberg BNA has projected the
2018 income tax rate tables shown below.
The tables for other filing situations are
included in Bloomberg BNA’s full report.
Personal Exemption
and Standard Deduction
Most taxpayers are entitled to claim
a personal exemption for each member
of their household. For 2018, the personal
exemption amount is projected to
increase slightly from $4,050 to $4,150.
The personal exemption is phased out for
high-income taxpayers.
When calculating their deductions,
taxpayers may choose to take the higher
of their itemized deductions or the standard
deduction. The standard deduction
amount varies depending on filing
status. The standard deduction amounts
for 2018 are projected to increase slightly
from 2017.
Estate and Gift
Tax Exclusions
Bloomberg BNA projects that the estate
tax basic exclusion for decedents dying in
2018 will be $5.6 million. The exclusion
amount was $5.49 million in 2017. The
annual gift tax exclusion is projected to
increase from $14,000 to $15,000 in 2018.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second
Floor, in Long Island City. If you have
any questions or require additional
information, please call John at 718-
707-0955.
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