PUB9180 02 18 (PDF)

A Resource for Individuals and Families

TAX REFORM

What you should know about the new tax bill
Now that the new tax bill has been signed into
law, it is important that you understand what’s
inside the bill and how it impacts you. The tax bill
is over 1,000 pages and changes many aspects
of our tax laws. Some of them may impact your
wealth management plan. While you should
contact your tax advisor to discuss your specific
concerns, some of the biggest personal income
tax changes are outlined below:
INCOME TAX RATES AND BRACKETS
Effective January 1, 2018, the seven individual tax rate brackets
are modified to be 10%, 12%, 22%, 24%, 32%, 35%, and 37%. This
change expires after 2025. The top 37% rate applies to single filers
with over $500,000 of taxable income and married joint filers
with over $600,000 of taxable income.

The Guardian Life Insurance
Company of America®
7 Hanover Square
New York, NY 10004-4025
www.guardianlife.com

PERSONAL EXEMPTIONS & STANDARD DEDUCTIONS
The deduction for personal exemptions is suspended. The new law
increases the standard deductions for single filers to $12,000 and
for married joint filers to $24,000. These changes expire after 2025.
Potential Planning Implications
While individual tax rates are generally being reduced, individuals
need to factor in the loss of personal exemptions on their taxable
income. See “Individual Alternative Minimum Tax (AMT)”
below for more information.
DEFINITIONS
Deductions – Amounts you are permitted to subtract from your
gross income to calculate your taxable income.
Exemptions – Items that reduce your taxable income by a standard
amount.

ITEMIZED DEDUCTIONS
The new law suspends and modifies many itemized deductions.
• Deductions for state and local income, sales and property taxes
(SALT) are capped at $10,000 in total.
-Prepayment
of 2018 state and local income taxes before
December 31, 2017 will not be deductible in 2017.
• The mortgage interest deduction is reduced. The allowable limit
is now $750,000 for primary and secondary homes.
--Mortgages incurred on or before December 15, 2017 are
grandfathered under the $1 million limit for primary and
secondary.

The AMT was not repealed but the AMT exemption was increased
to $70,300 and $109,400 for single filers and married joint filers,
respectively. The thresholds for the phase-out of the AMT
exemption were also increased to $500,000 for single filers and $1
million for married joint filers. This provision expires after 2025.
Potential Planning Implications
Individuals who have Incentive Stock Options (ISOs) may want
to exercise them in years where they are not subject to additional
income taxes (AMT) due to the higher exemptions. These
exemptions may trigger the necessity of that AMT payment.
Clients should consult with their tax professionals regarding
taxable implications from exercising any incentive stock options.

• The home equity interest deduction is suspended.
The changes above expire after 2025.
There is a temporary reduction to the medical expense deduction
that allows individuals to deduct medical expenses that exceed
7.5% instead of 10%, of adjusted gross income (AGI) in 2017 and
2018. Individuals may wish to accelerate medical expenses into
2017 and 2018 while the lower 7.5% of AGI limitation applies.
CHARITABLE INCOME TAX DEDUCTIONS
The new law increases the charitable contribution limit to 60% of
adjusted gross income for cash contributions. This change expires
after 2025.

DEFINITIONS
Appreciated Property – Property that has increased in value. Most
property depreciates. Real estate, a major exception, tends to
appreciate over time.
Donor-advised Fund – A private fund administered by a third party
and created for the purpose of managing charitable donations on
behalf of an organization, family, or individuals.
Incentive Stock Options – A stock option is a benefit in the form
of an option given by a company to an employee to buy stock
in the company at a discount or stated fixed price. An Incentive
Stock Option (ISO) is a type of employee stock option with a tax
benefit of not having to pay ordinary income tax when the option is
exercised. Instead, the option is taxed at a capital gains rate.

Contributions of appreciated property remain limited to 30%
of adjusted gross income. The five-year carryover for unused
charitable deductions remains, also.
Potential Planning Implications
Individuals who will no longer itemize may wish to consider the
use of a donor-advised fund in December 2017.
INDIVIDUAL ALTERNATIVE MINIMUM TAX (AMT)
The AMT is an additional income tax for certain individuals,
corporations, etc. that have exemptions or special circumstances
allowing for lower payments of standard income tax.

The Guardian Life Insurance
Company of America
7 Hanover Square
New York, NY 10004-4025
www.guardianlife.com

AFFORDABLE CARE ACT MEDICARE SURTAXES
The additional 0.9% tax on earned income and the 3.8% surtax
on net investment income resulting from the Patient Protection
and Affordable Care Act of 2010 remains unchanged. These taxes
apply to single filers making more than $200,000 and married
joint filers making more than $250,000.

SNAPSHOT OF OTHER TAX PROVISIONS
There are many other provisions in the new tax law. The following
is a brief summary of some of those changes.
• Tax preparation fees are no longer deductible, but this expires
after 2025.
• Moving expenses are no longer deductible except for members
of the Armed Forces. This expires after 2025.
• The ability to undo (“recharacterize”) a Roth IRA conversion
has been eliminated, effective in 2018. Note that the new law
applies to conversions after 2017. A 2017 Roth-IRA converter
still has until October 15, 2018 to undo that conversion
(assuming the 2017 tax return is filed on time).
• The shared responsibility payment for failing to maintain
minimum essential health care coverage is effectively
eliminated starting January 1, 2019.
• Up to $10,000 per year in 529 savings plan assets can be used
for grades K-12.

• The alimony deduction for the payor ex-spouse and the
inclusion of alimony in gross income of the recipient x-spouse
is repealed for any divorce or separation instrument executed
after December 31, 2018, or for certain divorce or separation
instruments executed on or before December 31, 2018 and
modified after that date.
• Miscellaneous expenses (e.g., advisor fees, legal fees, etc.) >2%
Adjusted Gross Income (AGI) may no longer be deducted. This
expires after 2025.
CONCLUSION
The new tax law is the first major tax change since 1986. It may be
years before its broader ramifications are known but it is almost
certain to have significant implications not only to corporations
and their investors, but to all Americans. Individuals should
work with their tax advisors to understand the impact on their
particular situation and to discuss their planning options.
Please consult with your Financial Advisor if you have any
questions concerning this document.

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or
accounting professional regarding your individual situation. Park Avenue Securities LLC (PAS) is an indirect, wholly-owned
subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker-dealer offering investment
products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member
of FINRA and SIPC.
Pub9180 (02-18) 2018-55656 (02-19)