The Tax Cuts and Jobs Act (TCJA), created drastic changes to personal exemptions and the standard deduction. For 2017, taxpayers could claim a personal exemption of $4,050 each for themselves, their spouses and any dependents. These exemptions could really add up for families with children and/or other dependents, such as elderly parents. For 2018-2025, the TCJA suspends personal exemptions. But increases to the child credit and a new family credit could offset this for some taxpayers.
Changes to the standard deduction could also help some taxpayers make up for the loss of personal exemptions. But it might not help a lot of taxpayers who typically itemize deductions. The TCJA nearly doubles the standard deductions for 2018 to $12,000 for singles and separate filers, $18,000 for heads of households, and $24,000 for joint filers. (These amounts will be indexed for inflation through 2025. After that, they’re scheduled to drop back to the amounts under pre-TCJA law.) Taxpayers can choose to either itemize certain deductions or take the standard deduction based on their filing status. Itemizing deductions when the total will be larger than the standard deduction saves tax, but it makes filing more complicated. The combination of a higher standard deduction and the reduction or elimination of many itemized deductions will mean that some taxpayers who once benefited from itemizing will now be better off taking the standard deduction.