How Will 2017 Tax Law Changes Affect You?
(P.S. Be prepared for more changes ahead!)
Every new year brings some changes to the tax laws, but this year, every day may bring them, too. The incoming Trump administration has promised more changes related to taxes and some may be enacted into law later this year. Below is an overview of changes effective January 1, and suggestions on how to stay current throughout the year.
Tax Changes January 1, 2017* Healthcare: Limits have increased for tax-deferred Medical Savings Accounts for the self-employed. The maximum deductible amount for out-of-pocket expenses for self-only coverage ($4,500), the deductible limit on a plan with family coverage ($6,750), and the minimum deductible amount for annual family coverage ($4,500) have all increased by $50 from 2016. The limit on out-of-pocket medical expenses under family coverage ($8,250) increased by $100.
In 2017, in order to claim a deduction for medical expenses when itemizing your taxes, your qualified medical expenses must be greater than 10% of your adjusted gross income. In prior years, an exception to this rule allowed seniors to deduct medical expenses over 7.5% of income.
Although Trump has vowed to appeal the Affordable Care Act, as of now it is the law. People who avoid signing up for health insurance in anticipation of changes are still subject to the lack-of-coverage penalty.
Federal Income Tax: Due to continued low inflation, the 2017 tax-bracket adjustments are minimal. When 2017 is compared to 2016, adjustments range from a $50 increase in income for single filers in the lowest tax bracket to a $3,550 increase in the 39.6% bracket filing as Head of Household. Standard deductions increase $50 for single filers and $100 for married couples filing jointly.
Exemption amounts for the Alternative Minimum Tax rose to $54,300 for individual filers and $84,500 for married couples filing jointly for 2017. To obtain complete 2017 tax-bracket tables for use in filing your 2018 tax return, contact your Mutual Trust Insurance Representative, click here.
Social Security and Medicare: Based on increases in the Consumer Price Index from the third quarter of 2014 through the third quarter of 2016, Social Security and Supplemental Security Income beneficiaries will receive a 0.3% cost-of-living adjustment for 2017. In 2017, the maximum taxable earnings for social security have increased from $118,500 for 2016 to $127,200.
This year, Medicare premiums, deductibles and co-payments will be higher, although costs vary by plan and coverage. There also are now less choices for Medicare Part D, and the prescription-drug plan choices for Medicare participants is expected to continue to drop.
In 2017, perhaps more than in previous years, you should expect ongoing changes, so it’s important to keep up with the news and pay attention to the effective dates of any changes in legislation. To help you stay up-to-date, visit www.irs.gov/uac/latest-news.
*Mutual Trust producers are prohibited from giving tax or legal advice and must advise clients to consult with a tax and legal expert of their choice.
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