The Tax Cuts and Jobs Act certainly contains some provisions that should reduce the tax bills of millions of Americans. In fact, most American taxpayers will pay significantly less tax in 2018 than they did in 2017.
However, this isn't the case for everyone, and the benefits might not be as big as you think -- especially if you generally itemize deductions every year. While about 30% of Americans in 2017 and earlier tax years itemized their deductions, it is estimated that the new standard deduction structure will mean that itemizing will only remain worthwhile for about 5% of taxpayers. That means these five popular tax breaks will no longer be useful to the vast majority of people when they file their next tax return in 2019.
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Mortgage interest: The Tax Cuts and Jobs Act keeps the mortgage interest deduction intact, but with a slightly lower cap of $750,000 in mortgage principal.
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Charitable contributions: U.S. taxpayers can deduct contributions made to charitable organizations, up to 50% of their adjusted gross income.
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Medical expenses: The Tax Cuts and Jobs Act changed the threshold for medical expense deductions in 2018. Taxpayers can now deduct medical expenses in excess of 7.5% of their adjusted gross income, compared to 10% under previous law.
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State and local taxes: Known as the SALT deduction, this was one of the most controversial points of the tax reform process. In the end, the deduction was kept, but was capped at a total of $10,000 of combined property and income (or sales) taxes.
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Casualty and theft losses: This is a relatively uncommon deduction, but can be quite valuable to taxpayers who qualify for it.
The standard deduction is higher, but to say it has "doubled" is a bit of a stretch
The Tax Cuts and Jobs Act's higher standard deduction was sold to the American public as a "doubling" of the deduction amount. And technically speaking, this is correct. The 2018 standard deduction will be nearly twice as much as it was in 2017.
However, this isn't truly "double" the previous deduction. The valuable personal exemption, which was essentially an additional $4,050 deduction for every taxpayer and dependent, is going away, which could actually translate to less of a total deduction for taxpayers with several dependents.
The losers of tax reform?
Arguably the biggest losers of tax reform will be the roughly 25% of taxpayers who itemized their deductions under the previous tax law, who will no longer be able to do so. This is especially true for families with several children.