New Tax Law Effective Date | H&R Block

August 09, 2018 : Joe Davis

On December 22, 2017, the federal tax reform bill was signed into law. While some of the provisions became effective for tax year 2017, most provisions go into effect in tax year 2018. A few provisions don’t go into effect until 2019.

Which provisions were in effect for tax year 2017?

Several temporary tax benefits were retroactively extended to allow taxpayers to claim them on their 2017 federal income tax returns. The most popular of those benefits include:

  • the itemized deduction for private mortgage insurance premiums,
  • the tuition and fees deduction, and
  • the exclusion from gross income of discharge of qualified principal residence indebtedness.

Additionally, the AGI threshold for the medical expense deduction decreased to 7.5% (from 10%) for tax years 2017 and 2018. Bonus depreciation was increased to 100% of the cost of qualified property acquired and placed in service after September 27, 2017.

Most other provisions have a tax reform effective date of 2018. The provisions with the broadest impact include:

  • elimination of personal and dependent exemptions,
  • increased standard deduction,
  • elimination of the deduction for unreimbursed employee business expenses,
  • elimination of the deduction for moving expenses (narrow exception for certain military-related moves),
  • $10,000 limit on itemized deductions for state and local taxes paid,
  • increased child tax credit,
  • new credit for other dependents,
  • new pass-through deduction for self-employed individuals, partners, and S-corporation shareholders,
  • top marginal corporate income tax rate reduced from 35% to 21%, and
  • new withholding tables applied by most employers, which generally reduced the amount of federal income tax withheld from employee’s paychecks.

While these provisions are all set to expire and revert back to 2017 law after 2025, the reduction in the corporate tax rate from 35% to 21% is permanent.

Several provisions are not in effect until tax year 2019. Those provisions include:

  • elimination of the shared responsibility payment (a.k.a. the individual mandate),
  • elimination of the deduction for payment of alimony pursuant to an agreement entered into after December 31, 2018, and
  • elimination of the inclusion for alimony received pursuant to an agreement entered into after December 31, 2018.

To find out how these changes affect you, visit an H&R Block office in your neighborhood or visit our online tax reform calculator.

Related Topics

Related Resources

Owe IRS

Get the facts about what happens when you owe the IRS and the payment options you may qualify for when you owe and can't pay.

IRS Notice CP289 – Annual Installment Agreement Statement

While you are in an IRS installment agreement, you will receive a CP289 yearly. Learn more about notice CP289 from the tax experts at H&R Block.

IRS Letter 4213C – Reduced Installment Agreement User Fee Request Denial

Your request for a reduced installment agreement user fee was denied. Learn how to address letter 4213C with help from the tax experts at H&R Block.

IRS Letter 2030 – Proposed Changes to Your Tax Return

Learn more about letter 2030 and how to handle an IRS adjustment to your business return with help from the tax experts at H&R Block.

Joe Davis