2018 Tax and Retirement Planning Information
There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Below is some information that you may find helpful as you consider your 2018 taxes, however, be sure to consult a trusted tax advisor for exact figures and with any questions regarding your specific personal tax needs and opportunities.
Income Tax Rate Schedules for 2018
| Tax Rate |
Single |
Married Filing Jointly |
|---|---|---|
|
10% |
$0 to $9,525 |
$0 to $19,050 |
|
12% |
$9,526 to $38,700 |
$19,051 to $77,400 |
|
22% |
$38,701 to $82,500 |
$77,401 to $165,000 |
|
24% |
$82,501 to $157,500 |
$165,001 to $315,000 |
|
32% |
$157,501 to $200,000 |
$315,001 to $400,000 |
|
35% |
$200,001 to $500,000 |
$400,001 to $600,000 |
|
37% |
Over $500,000 |
Over $600,000 |
2018 Standard Deduction
- Married couples filing a joint return - $24,000
- Single return filers - $12,000
2018 Personal Exemption Amount - Beginning in tax year 2018, the personal exemption amount is suspended until 2025.
2018 Taxation of Dividends and Long Term Capital Gains
Qualifying dividends and long-term capital gains (assets held for more than a year) will be taxed at 0%, 15%, or 20%.
| Rate | Single Income Limits | Married Filing Jointly |
| 10% | $0-$38,600 | $0-$77,200 |
| 15% | $38,601-$425,800 | $77,201-$479,000 |
| 20% | Over $425,800 | Over $479,001 |
2018 Medicare Surtaxes
As part of the health care reform enacted in 2010, additional Medicare surtaxes begin in 2013 for high-income wage earners and high-income investors. The surtaxes apply when a single taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceeds $250,000.
- For wage earners, an additional 0.9% Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
- For investors, an additional 3.8% Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.
Estate Taxes
- 2018 Estate size taxation starts at $11,180,000 with a top estate tax rate of 40%
- 2019 Estate size taxation starts at $11,400,00 with top estate tax rate of 40%
Regular IRA and Roth IRA Contribution Limits
Tax year 2018 IRA contribution limit is $5,500; additional contribution limits for those 50 and over is $1,000.
401(k) Retirement Plan Contribution Limits
Tax year 2018 401(k) deferral limit is $18,500; additional contribution limits for those 50 and over is $6,000.
Education (or Coverdell) IRAs
For 2018, the annual contribution limit is $2000 with eligibility phase out beginning at $220,000 (for married filing jointly) and $110,000 of Adjusted Gross Income (some modifications apply).
Annual Gift Tax Exclusion
For 2018, gifts of $15,000 and under are not subject to gift tax.
2018 Payroll Taxes – Social Security and Medicare
- 2018 Employee wages subject to Social Security tax of 6.2% - $128,400.
- 2018 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on employee wages above $200,000 in the calendar year, without regard for filing status.
- 2018 Self-employment income subject to Social Security tax of 12.4% - $128,400.
- 2018 Self-employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
2018 Social Security Benefits
- 2018 Average monthly benefit for all retired workers - $1,420.
- 2018 Average monthly benefit for retired couples - $2,340.
- 2018 Maximum monthly benefit for a worker at full retirement age - $2,788.