For many years, the standard deduction was a tax benefit rarely utilized by moderate to high net worth taxpayers, simply because their itemized deductions outweighed the standard deduction.
This will change significantly under the new tax plan, since the new plan has doubled the standard deduction to the following figures:
- For married couple filing jointly: $24,000;
- For heads of household: $18,000; and
- For Single Individuals: $12,000.
In addition to the doubled standard deduction, the new tax bill has eliminated many of the popular itemized deductions, leaving only the following:
- Deduction for charitable contributions;
- Deduction for payment of state and local taxes (limited to $10,000);
- Home mortgage interest expense deduction (up to $750,000);
- Deduction for medical expenses not covered by insurance (capped at 7.5% of AGI);
- Deduction for interest expense incurred in connection with investment income; and
- Deduction for casualty losses in a federally declared disaster area.