In a Nutshell
With recent changes to the tax code, married taxpayers filing jointly may see some differences in the tax deductions and credits they normally take. Here’s a rundown of what to expect.This article was fact-checked by our editors and reviewed by Rachel Weatherly, tax product specialist with Credit Karma.
If you’re married and plan to file your taxes jointly with your spouse, the Tax Cuts and Jobs Act made some changes that could affect your taxes in 2018 and beyond.
While some elements of the 2017 tax reform may limit how much you can deduct from your adjusted gross income, others may ultimately help reduce your total tax bill.
In this article, we’ll cover each of the major tax deductions for couples who are married and filing jointly. We’ll also go over credits that have changed and what it all potentially means for you.
Tax rates
The Tax Cuts and Jobs Act lowered tax rates and updated tax brackets across the board, including the ones for married couples filing jointly.
Here’s a look at the new tax rates for those who are married filing jointly and their corresponding tax brackets compared with last year:
| Marginal tax rate 2017 | Taxable income for married taxpayers filing jointly | Marginal tax rate 2018 | Taxable income for married taxpayers filing jointly |
|---|---|---|---|
| 10% | $18,650 and less | 10% | $19,050 and less |
| 15% | $18,651 – $75,900 | 12% | $19,051 – $77,400 |
| 25% | $75,901 – $153,100 | 22% | $77,401 – $165,000 |
| 28% | $153,101 – $233,350 | 24% | $165,001 – $315,000 |
| 33% | $233,351 – $416,700 | 32% | $315,001 – $400,000 |
| 35% | $416,701 – $470,700 | 35% | $400,001 – $600,000 |
| 39.6% | Over $470,700 | 37% | Over $600,000 |
Tax brackets and rates have changed for many married filers, and both affect the amount of tax you ultimately owe.
FAST FACTS
What is a tax bracket?
A tax bracket is a range of taxable income with a corresponding tax rate. However, to calculate your 2018 federal income tax using your tax bracket and tax rate, you’ll need additional information from the Tax Cuts and Jobs Act.
Tax for each bracket and filing status is calculated by applying the tax rate to income that falls within the thresholds for the bracket. Learn more about calculating tax here.
Standard deduction and personal exemptions
In 2017, the standard deduction for taxpayers who are married filing jointly was $12,700. For 2018 , Congress upped that deduction to $24,000.
“On the surface that sounds pretty good,” says Micah Fraim, a Virginia-based certified public accountant. “But there are a couple of reasons that it sounds better than it is. For example, since they doubled the standard deduction, the percentage of people who will itemize their deductions may go down pretty drastically.”
Fraim also points out that Congress eliminated personal exemptions, which amounted to $4,050 each for you, your spouse and your dependents — as long as your adjusted gross income didn’t exceed a certain amount.
So while the standard deduction increased by $11,300, a family of three simultaneously lost $12,150 worth of personal exemptions. Larger families will miss out on even more deductions through this change.
Child and family tax credit
While families may not be happy about the loss of personal exemptions, changes to the child tax credit may make up for it.
Specifically, the amount of the tax credit was doubled from $1,000 to $2,000 per qualifying child, of which $1,400 is refundable. There’s also an additional nonrefundable credit of $500 that you can take for other qualifying dependents.
Changes to itemized deductions
If your total itemized deductions for 2018 will exceed the standard deduction, tax reform has some good news for you.
In 2017, your itemized deductions would be reduced if your adjusted gross income exceeded $313,800. This year, however, there is no limit to what you can itemize regardless of your income level.
That said, you can no longer take certain miscellaneous itemized deductions that were previously allowed if they were more than 2% of your adjusted gross income. A few examples include:
- Educator expenses
- Work-related education
- Work clothes and uniforms if required and not suitable for everyday use
- Job search expenses
- Business liability insurance premiums
State and local tax deduction
If you itemize your deductions, you can opt to deduct certain state and local taxes, including property and income taxes. Alternatively, you can choose to deduct state and local property taxes and sales tax instead of income taxes.
Before tax reform, there was no limit to this deduction. But now you’re limited to deducting $10,000 total for all state and local taxes you pay in 2018 ($5,000 if you’re married filing separately). This may not matter to some taxpayers, but if you generally pay a lot in state and local taxes, it could increase your tax bill.
“That cap is the same whether you’re single or married filing jointly,” says Fraim, “which means that it’s inherently hurting married taxpayers more if they’re high-income earners or they pay a lot in property taxes.”
Mortgage interest tax deduction
If you already own a home and took out your mortgage before Dec. 15, 2017, your mortgage interest deduction won’t change. However, tax reform made changes that could affect your mortgage interest deduction if you get a mortgage in the tax years between Jan. 1, 2018 and Dec. 31, 2025.
For new mortgages, tax reform limits the amount of home acquisition debt for which you can deduct interest to $750,000 if married filing jointly. Previously, that limit was $1 million.
Additionally, tax reform suspended the deduction of interest paid on home equity loans and lines of credit — unless you use the money to buy, build or substantially improve the home that secures the loan. So if you get a home equity line of credit, or HELOC, to build an addition to your home, that interest could still be deductible. If you use your home equity to pay off credit card debts, that interest wouldn’t be deductible.
Again, this won’t do much to most married taxpayers filing jointly. But high-income earners with more than $750,000 in new mortgage debt could end up with a higher tax bill.
529 plan withdrawals
If you have children, you may have opened a 529 college savings plan to set aside money for their college education. While the money you contribute to the plan isn’t deductible from your federal income taxes, you aren’t taxed on any gains on the money in the plan provided you use withdrawals to pay for qualified education expenses.
Previously, 529 plans could only be used to pay for postsecondary education. With the new tax law, you can also use those funds to pay tuition at a private, public or religious elementary or secondary school. The only caveat is that the benefit is capped at $10,000 per year.
That said, Fraim recommends that parents keep in mind that using 529 plan funds for younger children could limit how much they can help their kids later on.
“If you’re the average person to where you have a finite amount of money that you could realistically throw in [a 529 plan],” he said, “it makes a lot more sense just to keep it in there and use it for college.”
Bottom line
Depending on your situation, the recent tax reform could help or hurt your chances of getting a tax refund. As you look toward filing your 2018 taxes and beyond, it’s essential that you know what these changes are and how they might affect your federal income tax bill.
Rachel Weatherly is a tax product specialist with Credit Karma. She studied accounting and finance at Western Carolina University and has also worked as a tax analyst. You can find her on LinkedIn.