Recent tax reform legislation affected the tax code in many ways. Here are four tax breaks that survived the cut that will take effect for the 2018 filing year.
- Mortgage Interest Deduction
The mortgage interest deduction is limited to mortgage principal of $750,000 on new homes. Previously, the limit was $1 million. Existing mortgages are grandfathered in and purchases made before April 1, 2018 are able to use the prior limit of $1 million.
- State and Local Income Tax, Sales Tax and Property Tax
Previously, taxpayers who itemize were allowed to deduct the amount they pay in state and local taxes from their federal tax returns. The total deduction for property taxes, state, local, and foreign income taxes, or sales taxes is limited to $10,000 a year ($5,000 married filing separately) for taxable years 2018 through 2025.
- Educator Expense Deduction
Primary and secondary school teachers buying school supplies out-of-pocket are still able to take an above-the-line deduction of up to $250 for unreimbursed expenses. Expenses for professional development are also eligible.
- Medical Expense Threshold Amounts
For tax years 2017 and 2018, the threshold amount for medical expense deductions is reduced to 7.5 percent of Adjusted Gross Income.