The Tax Cuts and Jobs Act has suspended the personal exemption deduction.
Current Law
Through December 31, 2017
In determining taxable income, an individual is allowed to reduce Adjusted Gross Income (AGI) by any personal exemption deductions. Personal exemptions are generally allowed for the taxpayer, spouse, and any dependents. For 2017, the inflation-adjusted personal exemption is $4,050 per person.
New Law
Effective for tax years beginning after December 31, 2017, and before January 1, 2026
The personal exemption will be suspended ($0 per person) for tax years beginning after December 31, 2017, and before January 1, 2026; for tax years 2018-2025.
Commentary
Filing requirements for individuals will be based solely on the standard deduction for tax years 2018-2025 since the personal exemption will be suspended. Also, due to changes to the standard deduction, personal exemptions, and tax credits, it is expected that Federal-withholding tables for wages will be updated in early 2018. This will impact net paychecks for many employees. It is recommended that employees revisit their withholding allowances in early 2018 as well.
