5 Tax Breaks
That Survived Tax Reform
Recent tax reform legislation affected many provisions in the
tax code. Many were modified, either permanently or
temporarily, while some were repealed entirely. Here
are five that survived.
Mortgage Interest Deduction
While the House bill repealed the mortgage interest deduction,
the final version of the act retained it, albeit with
modifications. First is that the allowed interest deduction is
limited to mortgage principal of $750,000 on new homes (i.e.,
new ownership). For prior tax years, the limit on acquisition
indebtedness was $1 million. Existing mortgages are
grandfathered in, however, and taxpayers who enter into
binding contracts before December 15, 2017, to close on the
purchase of a principal residence before January 1, 2018, and
who purchase such residence before April 1, 2018, are able to
use the prior limit of $1 million.
Personal Taxes: State and Local Income Tax, Sales Tax and
In prior years, taxpayers who itemize were allowed to deduct
the amount they pay in state and local taxes (SALT) from their
federal tax returns. Slated for repeal (with the sole
exception of exception of a state and local property tax
deduction capped at $10,000) under both the House and Senate
versions of the tax bill, SALT remained in the final tax
reform bill in modified form. As such, for taxable years 2018
through 2025, the aggregate deduction for property taxes,
state, local, and foreign income taxes, or sales taxes is
limited to $10,000 a year ($5,000 married filing separately).
Primary and secondary school teachers buying school supplies
out-of-pocket are still able to take an above-the-line
deduction of up to $250 for unreimbursed expenses. Expenses
incurred for professional development are also eligible. This
deduction was made permanent with the passage of PATH Act of
2015 and survived tax reform legislation that passed in 2017
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Electric Drive Vehicle Tax Credit
Also slated for elimination in the House bill (but retained in
the final tax reform bill) was the tax credit for the purchase
of qualified plug-in electric drive motor vehicles including
passenger vehicles and light trucks. For vehicles acquired
after December 31, 2009, the minimum credit is $2,500. The
maximum credit allowed is limited to $7,500. The credit begins
to phase out for a manufacturer's vehicles when at least
200,000 qualifying vehicles have been sold for use in the
United States (determined on a cumulative basis for sales
after December 31, 2009).
Medical Expense Threshold Amounts
The House version proposed a repeal of the itemized deduction
related to medical expenses but it was retained (and
temporarily lowered) in the final tax reform legislation. For
tax years 2017 and 2018, the threshold amount for medical
expense deductions is reduced to 7.5 percent of AGI. Under the
PATH Act of 2015, the medical expense deduction increased to
10% of AGI (effective for tax years 2013 to 2016).
Don't miss out!
If you're wondering whether you should be taking advantage of
these and other tax credits and deductions, don't hesitate to
While this list of 5 breaks survived, there are other
important tax changes for 2018. Don't hesitate to call if you want to
get an early start on tax planning for 2018! Call the office today at 301-657-8080.
DID YOU KNOW
that Sullivan & Company manages Pension Funds,
Retirement Plans & Taxable Accounts through Archer
Investment Corporation & Fidelity Investments for our
Fidelity is the custodian for more
retirement plans than any other custodian in the United
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Management at Sullivan & Co. CPAs
Sullivan leads our
Group and is here to help you navigate your
As Investment Advisor
Representatives, he and our Wealth Management team are able
to provide an independent opinion on the investments you
already own or are considering buying.
We can structure a portfolio
based on your risk tolerance or we can help you decide how
to invest in your company 401(k) plan.
We work with each
client to identify their concerns and to provide solutions
according to their situation.
is also experienced in company retirement plans. If you own
a business that does not have a plan; we can discuss your
options and set up a plan that fits your company.
If your business already has a
plan; we offer a free evaluation of the plan to ensure that
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Our goal is to provide personal, unbiased and independent
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financial life and investments.
Contact Chris Bailey, CPA, MBA, IAR or Ben Perron, CPA, IAR
or Paul Sullivan, CPA, IAR to set up a free
initial consultation (301) 657-8080.
And as always if you have any questions about accounting or
investments and how they effect you or your business, please
give us a call. We can help guide you in the right
you can call our offices if you have any questions about these
or any other accounting, tax, financial planning or insurance
related issues, at 301-657-8080.
Regards, Paul Sullivan, CPA, IAR
President, Sullivan & Company