In 2017, Congress and President Trump passed sweeping tax reform that changes how businesses and individuals will plan for federal and state taxes in the years to come.

Advisors, especially those who help with tax planning, need to be aware of the changes, said Sheryl Rowling, head of rebalancing solutions for Chicago-based Morningstar.

“The tax world as we know it has been significantly changed,” said Rowling. “The decisions that [advisors] make on their clients behalf, and the recommendations that they offer, will have to be based on a whole new foundation.”

The reform cuts corporate and individual tax rates, with reductions in business taxes made permanent, while individual tax cuts are slated to expire in 2025.

Businesses will pay a federal tax rate of 21 percent, down from a maximum of 35 percent before reform, while pass-through entities like S corporations and limited liability companies may or may not see their rates reduced. Individauls will pay a maximum tax rate of 37 percent, down from a maximum rate of 39.6 percent, while the standard deduction will double to $12,000 for singles and $24,000 for married couples.

At the same time, individuals will lose many of their exemptions and deductions, including the personal exemption and many other itemized deductions.

Rowling offered five tips for advisors helping their clients tackle the new tax laws:

Watch your clients’ withholdings.

While clients may get a larger paycheck due to the new withholding tables, they should be wary that they may owe more come April 2019.

“I can recall many years ago there was a similar situation where wage earners got more in their paychecks each month because withholding rates were reduced,” said Rowling. “The new tax laws create a relaxed attitude. When it comes time to do taxes, many people find out that they didn’t have enough withholding and ended up owing money.”

Rowling noted that the November mid-term elections will occur before American taxpayers face the reality of their 2018 taxes.

Help decide whether to itemize or claim the standard deduction.

With many itemized deductions eliminated and the standard deduction increased, more taxpayers should be claiming the standard deduction, said Rowling.

“Employers will be withholding less, but itemized deductions have also been slashed,” said Rowling. “Saving the extra money from the reduced withholding is good advice, because if it ends up not being needed, [clients] have funds to add to an IRA or SEP or another investment account.”

As of 2018, the following deductions may still be itemized: Medical expenses in excess of 7.5 percent of adjusted gross income, mortgage interest on principal of up to $1 million for pre-law homes and $750,000 for newly acquired homes, charitable contributions, and up to $10,000 of state, local and property taxes.

Consider bunching deductions.

Claiming the standard deduction in one year does not preclude a client from itemizing their expenses in another year. So it might make sense for taxpayers to pick and choose what years they itemize deductions, she said.

“It really depends on the client and the situation,” said Rowling. “Sometimes there might be a high-income year where it might make sense to bunch as much as possible in areas like medical expenses, charitable contributions and mortgage interest."

Deductions that are capped, such as local and states taxes, shouldn't be bunched, she said.

Use a donor-advised fund.

Following on the theme of bunching deductions, a donor-advised fund allows clients to bunch charitable contributons, noted Rowling.

The tax benefits of a donor-advised fund are enhanced by the ability to donate appreciated shares of securities and receive a deduction for the full value of the shares.

“A client can contribute a large amount to a donor-advised fund one year in which they get to write off the entire amount, then they can pull from that pool of money to make charitable contributions in subsequent years,” Rowling said.

Be aware of other tax-saving strategies.

Advisors should always keep in mind that their clients can donate to an IRA, SEP or other retirement plan or plan a Roth conversion with their tax liabilities in mind.

“I think a Roth conversion still makes sense, but it depends on the taxpayer’s bracket,” said Rowling. “If they’re in a lower, variable bracket, it might make sense to do Roth conversions or take distributions in order to use up whatever gap there is between their current income and the top of the bracket. For those in fairly high tax brackets, there’s little room to try to accelerate withdrawals and conversions.”