704-887-5298 david@davidrayecpa.com

Tax revenue losses from the various exclusions, exemptions, deductions and credits that exist in the tax code are generally defined by the federal government as tax expenditures. The following is a list of the 10 largest individual tax expenditures according to the Joint Committee on Taxation, a nonpartisan, congressional group.  The listing includes how each of these tax expenditures fared in the recent tax reform bill passed by Congress and signed into law in December.

 

  1. Tax favored retirement plans and accounts – This includes IRAs, 401ks and the like. These breaks were mostly untouched by tax reform.
  2. Exclusion for employer provided health insurance – still alive and well
  3. Reduced tax rates for qualified dividends and long term capital gains – these rates did not change.
  4. Tax free Social Security benefits – no change. Benefits are taxed by some taxpayers depending on their level of income.
  5. State and local income and property tax deductions – This break received the biggest hit but still survived although capped now at $ 10,000 annually.
  6. Mortgage interest deduction – Mostly survived but home equity interest deductibility has gone away.
  7. Charitable contributions – This deduction isn’t going anywhere!
  8. Earned income credit – unchanged
  9. Child tax credit – This credit was increased and made available to many more taxpayers.
  10. Health premium tax credit – This Obamacare provision is unchanged (for the moment).

Not surprisingly, 9 of the 10 were either unchanged or barely touched. Only one, the state and local tax deduction, was drastically cut.  All this is generally good news for taxpayers who will continue to see the benefits of these various tax breaks well into the future.

 

David K. Raye, CPA, P.C.                     704-887-5298             www.davidrayecpa.com

*The information in this blog post is general in nature and not intended as specific advice.  Please consult a tax advisor to see how this information applies to your specific situation.