4 | RKL 2018 Year-End Tax Planning Guide RKL 2018 Year-End Tax Planning Guide | 5 Tax reform impacts individuals in a number of ways, like lower personal income tax rates and simplification in certain areas. In this section, we’ll explain how your federal personal income tax return will look different in 2018 than it did in 2017. At the state level, conformity with provisions like changes to deductions may be an issue in certain jurisdictions. RKL’s tax team includes the state and local tax expertise to help clients navigate such conformity issues and interpret other relevant state legislative actions. Beyond the life events that can affect tax status, year-end planning and review is even more vital in the new tax reform era. Your RKL advisor can guide you through important conversations around withholding status, eligibility for itemized deductions and the impact of changes to tax rates and taxable income. The Tax Cuts and Jobs Act retains seven tax brackets. The upper tiers of most of the tax brackets increased. Overall tax rates for individuals have temporarily decreased, but some more than others. The previous rates of 10, 15, 25, 28, 33, 35 and 39.6 percent were replaced starting on January 1, 2018, with rates of 10, 12, 22, 24, 32, 35 and 37 percent. These rates will return to previous 2017 levels after 2025. The combination of these factors equals a generally lower effective tax rate. However, due to changes in the way taxable income is calculated, not everyone’s taxes will decrease. SINGLE RATE HEAD OF HOUSEHOLD MARRIED FILING JOINTLY MARRIED FILING SEPARATELY 10% 12% 22% 24% 32% 35% 37% TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED 10% of taxable income $0 to $9,525 $9,525 to $38,700 $38,700 to $82,500 $82,500 to $157,500 $157,500 to $200,000 $200,000 to $500,000 $500,000+ $952.50 plus 12% of the excess over $9,525 $4,453.50 plus 22% of the excess over $38,700 $14,089.50 plus 24% of the excess over $82,500 $32,089.50 plus 32% of the excess over $157,500 $45,689.50 plus 35% of the excess over $200,000 $150,689.50 plus 37%of the excess over $500,000 TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED 10% of taxable income $0 to $9,525 $9,525 to $38,700 $38,700 to $82,500 $82,500 to $157,500 $157,500 to $200,000 $200,000 to $300,000 $300,000+ $952.50 plus 12% of the excess over $9,525 $4,453.50 plus 22% of the excess over $38,700 $14,089.50 plus 24% of the excess over $82,500 $32,089.50 plus 32% of the excess over $157,500 $45,689.50 plus 35% of the excess over $200,000 $80,689.50 plus 37%of the excess over $300,000 TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED 10% of taxable income $0 to $13,600 $13,600 to $51,800 $51,800 to $82,500 $82,500 to $157,500 $157,500 to $200,000 $200,000 to $500,000 $500,000+ $1,360 plus 12% of the excess over $13,600 $5,944 plus 22% of the excess over $51,800 $12,698 plus 24% of the excess over $82,500 $30,698 plus 32% of the excess over $157,500 $44,298 plus 35% of the excess over $200,000 $149,298 plus 37%of the excess over $500,000 TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED TAX OWED 10% of taxable income $0 to $19,050 $19,050 to $77,400 $77,400 to $165,000 $165,000 to $315,000 $315,000 to $400,000 $400,000 to $600,000 $600,000+ $1,905 plus 12% of the excess over $13,600 $8,907 plus 22% of the excess over $77,400 $28,179 plus 24% of the excess over $165,000 $64,179 plus 32% of the excess over $315,000 $91,379 plus 35% of the excess over $400,000 $161,379 plus 37%of the excess over $600,000 INDIVIDUAL TAX PLANNING INDIVIDUAL TAX RATES & BRACKETS TAX REFORM IMPACT: Individuals WATCH Withholdings • Overall tax rates decreased • Personal exemption eliminated • Standard deduction doubled & popular deductions changed • AMT remains but exemptions & phase-outs raised These provisions sunset on Jan. 1, 2026 without additional legislative action. Since the passage of tax reform, the IRS issued several pieces of withholding guidance, including an updated Form W-4 and withholding calculator. Annual evaluation of withholding positions is a personal finance best practice, but it is even more vital in light of tax reform changes. The IRS recommends performing a “payroll checkup” and adjusting existing W-4s and withholding positions as needed based upon the recent tax law changes.