9 Things You Need to Know About the Republican Tax Overhaul
2. Standard deduction increased
Under the new tax plan, the standard deduction will increase from $6,500 for individuals and $13,000 for married couples to $12,000 and $24,000, respectively.
The Atlantic reports that the standard deduction increase will "represent the biggest tax cut in the plan" and will "offset the reduction in the state-and-local tax deduction."
However, the impact of the doubling of the standard deduction will be limited by the elimination of personal exemptions and itemized deductions, critics have warned.
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As for people who prefer to itemize their deductions, the new tax plan might offer a variety of unwanted changes and new limits on deductions that many might rely on every year, such as changes to limits on the mortgage interest deduction and state and local tax deductions.
The increased standard deduction also means fewer families will use the deduction for charitable contributions. Some charities, including churches, are concerned this will mean fewer donations.
Under the new plan, homebuyers can deduct interest on home loans of up to $750,000, as opposed to the old plan where the limit was $1 million.
Under the old plan the deduction for state and local property taxes was unlimited. Under the new plan, the deduction on property taxes is capped at $10,000, which could have a negative impact on home owners in high tax states and cities.
According to a CNN report citing statistics from ATTOM Data Solutions there are as many as 4.1 million Americans that pay more than $10,000 in property taxes.
