TAX BULLETIN 2018-1: TAX REFORM SIGNED INTO LAW INDIVIDUAL TAXES (continued) 2017 Law 2018 Law Under the “Pease” limitation, up to 80% of Repeals the Pease limitation on itemized most itemized deductions are lost when deductions ee nul ta | $313,800 Mortgage interest deduction: $750,000 limit , or single taxpayers on acquisition indebtedness retained (principal or secondary residence); deduction for home equity loan repealed Deduction for state and local income, sales ; ; tax and real property taxes limited to Itemized Deductions $10,000 in aggregate ($5,000 for married filing separately); deduction allowed for state and local taxes on trade or business or if related to production of income. Payment of income taxes in 2017 for a subsequent year would not be deductible in 2017.4 Deduction for medical expenses retained and liberalized for 2017 and 2018 * ; ; Contributions can be placed into deferred Unchanged Retirement Savings account, up to contribution cap Parallel tax calculation with top rate of 28% Retains and modifies AMT; exemptions and $84,500 exemption for married taxpayers raised to $109,400 (married) and $70,300 AMT ($54,300 others); phase out of exemption (others); phase-out of exemption begins at begins at $160,900 for married taxpayers $1 million for married taxpayers ($500,000 ($120,700 others) others). 4 ; Retains character as capital gain and eligible Requires three-year holding period to attain Carried Interest for preferential tax rates long-term capital gains rate Investment 3.8% tax on “net investment income” Unchanged — continues to apply Surtax OBSERVATIONS — INDIVIDUAL TAXES Under the Act, there will be winners and losers on the personal income tax side. Generally, wage earners from no-tax states... could see tax savings under the Act. For instance, a Florida taxpayer earning $1 million with moderate itemized deductions may see a tax savings of about $30,000 under the Act. A similar taxpayer in New York State may see a savings of about $3,500