On December 22, just in time for Christmas (and ruining the holidays for many accountants and tax consultants), the President signed into law sweeping tax reform legislation, the largest in over thirty years.

The law makes fundamental changes in the way you, your family and your business, if you have one, calculate your federal income tax bill, and the amount of federal tax you will pay.

While new discoveries about what is actually in the law and what certain provisions actually do are being uncovered daily, here is a brief summary of some of the major provisions that we do know about as they pertain to individuals. In two weeks, I’ll write more about tax reform changes for business.

Lower tax rates: Tax rates are reduced for many taxpayers, effective for the 2018 tax year, with the maximum individual rate at 37 percent. The new rates are 10, 12, 22, 24, 32, 35 and 37 percent.

Personal Exemptions: The new tax law repeals personal exemptions, which are valued at $4,050 per taxpayer, spouse and dependent in 2017.

Child Tax Credit:  The new law expands the Child Tax Credit up to $2,000 per eligible child, with up to $1,400 of that being refundable (meaning it can be refunded to you even if you owe or have paid in no tax).

Itemized Deductions:  Individuals will only be able to claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the total of (1) state and local property taxes; and (2) state and local income taxes.

New limits are placed on the deduction for home mortgage interest, including eliminating the deduction for interest paid on home equity loans. For acquisition mortgages incurred on or after December 15, 2017, the deduction is limited to interest on debt of $750,000, down from $1 million.

The itemized deduction for charitable contributions still remains. But because many other itemized deductions are eliminated in exchange for a larger standard deduction (e.g., $24,000 for joint filers; $12,000 for single filers), charitable contributions may not yield a federal tax benefit for many because they won't itemize deductions anymore.

Speaking of charitable contributions, donations made to universities will no longer be deductible if the donations are made in exchange for the right to purchase tickets or seating at an athletic event.

The new law temporarily boosts itemized deductions for medical expenses. For 2017 and 2018, these expenses can be claimed as itemized deductions to the extent they exceed a floor equal to 7.5 percent of your adjusted gross income (AGI), down from 10 percent. Again, keep in mind that many individuals will claim the larger standard deduction beginning in 2018, so this may be of minimal benefit.

Alternative Minimum Tax:  The new law substantially increases the alternative minimum tax (AMT) exemption amount for individuals beginning with the 2018 tax year. Many hoped AMT would be eliminated altogether.

Alimony Payments:  Under current rules, alimony payments generally are an above-the line deduction for the payor and included in the income of the payee. Under the new law, alimony payments aren't deductible by the payor or includible in the income of the payee, generally effective for any divorce decree or separation agreement executed after December 31, 2018.

Moving Expenses:  The new law suspends the deduction for moving expenses after 2017 (except for certain members of the Armed Forces), and also suspends the tax-free reimbursement of employment-related moving expenses.

Miscellaneous Itemized Deductions:  Under current law, various employee business expenses, e.g., employee home office expenses, are deductible as itemized deductions if those expenses plus certain other expenses exceed 2 percent of AGI. The new law eliminates the deduction for all miscellaneous itemized deductions that were subject to the 2 percent floor, including employee business expenses.

Like-Kind Exchange: Tax deferred like-kind exchanges will now be possible only if they involve real estate that isn't held primarily for sale.

By the way, many of these changes discussed above expire after the year 2025, something not very well publicized. After that, they return to pre-2018 law, assuming no intervening legislative action.

Lane Keeter, CPA is Office Managing Partner of the Heber Springs Office of EGP,