5 Ways the Tax Cuts and Reform Act of 2017 Will Impact You
December 31, 2017
On December 22nd, 2017, President Donald Trump signed the Tax Cuts and Reform Act of 2017 into law. This legislation makes significant changes to the tax code of the United States. Here are five ways that people affected by MS could be impacted by these changes:
- You will likely see your federal income tax burden reduced by a few percent, beginning in 2019 when you file your taxes for 2018. Bloomberg breaks down how taxpayers will fare under the new tax brackets.
- The Tax Cuts and Reform Act of 2017 effectively eliminated the Affordable Care Act’s individual mandate by setting the monetary penalty for not complying to $0. This means that, beginning in 2019, you will not be fined or penalized for not enrolling in a health insurance policy. While you will have the option to refuse health insurance coverage, the Society encourages you to maintain comprehensive health insurance coverage to help you access affordable and quality health care.
- The non-partisan Congressional Budget Office (CBO) projected that approximately 13 million fewer people will be covered by health insurance by 2027 as a result of the government no longer enforcing the individual mandate. The cumulative effect of this many people not participating in the insurance market is projected to increase premiums for those who still purchase individual health insurance by about 20 percent.
- The Medical Expense Deduction currently allows individuals to deduct from their taxes medical and dental expenses that exceed 10% of their Adjusted Gross Income (AGI). For tax years 2017 and 2018, individuals will be able to deduct from their taxes medical and dental expenses that exceed 7.5% of their AGI. This will allow individuals to benefit from a greater deduction than usual. From 2019 onward, the deduction will revert to 10%.
- The standard deduction and individual exemption have been streamlined into a single $12,000 standard deduction for individual filers and $24,000 for joint filers. While the increase in the standard deduction will result in a lower federal tax burden for some taxpayers, the Indiana University Lilly Family School of Philanthropy projected that this will lead to fewer people itemizing their taxes and a cumulative $12-$13 billion reduction in the amount of money individuals donate to charities and non-profits, like the National MS Society. In future years when filing your taxes, you may have a more difficult time reaching the new standard deduction threshold to itemize your taxes and to take advantage of the Charitable Contribution Deduction. The National MS Society will continue to monitor this to understand how it will impact the organization.