Report Predicts Major Tax Savings Coming In 2018

As Congress begins to tackle an overhaul of the tax code, Bloomberg BNA has calculated the automatic changes that will be made in the code for 2018, which are projected to save taxpayers thousands of dollars.

The changes are made each year based on the consumer price index. Bloomberg BNA, based in Alexandria, Va., provides analysis and research on tax and business data.

“While the IRS won’t announce the inflation adjustments for next year for some time, our projections help taxpayers and tax planners get a jump start on the 2018 tax planning season by allowing them to more accurately estimate their tax liabilities for the upcoming year,” said George Farrah, Bloomberg BNA tax and accounting editorial director.

“As part of their 2017 year-end review, taxpayers should evaluate their wealth transfer strategies to fully utilize the higher exclusions in 2018. Many taxpayers will slip into a lower tax rate in 2018 because of increases in the tax brackets. The standard deduction and personal exemption amounts will also increase, offering tax relief to many taxpayers due to inflation,” Farrah added.

For instance,  Bloomberg BNA predicted the first increase in the annual gift tax exclusion in five years, from $14,000 to $15,000.

Tax brackets will be pushed upward and the standard deduction and exemption amounts will go up, making the tax due on a given amount go down.

Bloomberg BNA gives the following example: Married taxpayers filing jointly with an income of $237,000 were in the 33 percent bracket and paid $53,427 in tax in 2017. In 2018, the brackets are adjusted for inflation, and the couple will be in the 28 percent bracket for 2018 and pay $52,983 in tax, or $444 less. Other tax brackets are similarly affected.

High-income taxpayers will enjoy a measure of relief in 2018 as well because the top 39.6 percent tax bracket is projected to begin at $480,050 for married taxpayers filing joint returns and at $426,700 for unmarried individuals. This represents an increase from $470,700 and $418,400, respectively in 2017, Bloomberg BNA says.