Recent Tax Legislation that Currently Affects Taxpayers
(Beginning with Most Recent Changes)
SECURE Act 2.0 (December 2022)
- Starting in 2023, the age for required minimum distributions from IRAs and retirement plans is 73. In 10 years it moves to 75.
- “Emergency” Expense distribution from 401k up to $1000 could be taken that is not subject to 10% penalty.
- Some businesses required to enroll employees in 401K plans.
- There is now an option to rollover a 529 plan to a Roth IRA.
For more information, see this article.
Inflation Reduction Act (August 2022)
- Targets reducing America’s carbon emissions and greater use of clean energy
- Extends Premium subsidies in Affordable Care Act marketplaces, aims to lower some medical costs
- Expands IRS enforcement funding by about $80 billion over 10 years.
For more information, see this article.
American Rescue Plan (March 2021)
- Authorized (third round) $1400 per person stimulus payments for households under 80K (single), 120K (head household), and 160K (married joint)
- Taxpayers with under 150K incomes can exempt $10200 of unemployment benefits received in 2020 from income taxes
- Expands Child Tax credit to $3000 per child for 2021 ($3600 for children under 6) —Advanced payments began July 2021
For more information, see this article.
Consolidated Appropriations Act (December 2020)
- Authorized additional stimulus payments of up to $600 per adult filer and $600 per qualifying child
- Allows taxpayers to use 2019 income to calculate Earned Income Credit if desired.
- Additional Unemployment benefits of $300 for 11 weeks.
- Charitable Deduction amount increased to $600 for joint returns
For more information, see this article.
The CARES Act-2020
- Authorized Economic Impact Payments of up to $1200 per adult filer and $500 for qualifying children. (most payments sent in April of 2020)
- Additional Federal unemployment benefits of up to $600 for approx 4 months.
- 401K loan amounts increased
- Allows 401k distributions up to 100,000K without penalty for Coronavirus related reasons. Taxes can be spread over 3 years.
- Required minimum distributions from retirement accounts do not have to be taken in 2020
- Charitable deduction of up to $300 allowed for taxpayers who do not itemize
For more detail, see this resource.
The SECURE Act-2019
- Changed age for required minimum distributions from 70 1/2 to 72 for retirement plans such as IRAs and 401Ks
- Eliminated “stretch” IRA for non-spouse beneficiaries. Now funds must be disbursed within 10 years.
For more information, see this article.
Tax Cuts and Jobs Act-2017 (TCJA) Highlights
- This legislation reduced tax rates thru 2025 to: 10%, 12%, 22%, 24%, 32%, 35%, 37%.
- Increased Child Tax Credit from $1000 to $2000 and created a $500 credit for other dependents.
- Capped itemized deduction for property tax and income tax paid to $10,000 per return, whether married or single.
- Eliminated most miscellaneous deductions, such as job-related expenses.
- Created a “pass through” deduction of 20% for small businesses (including sole-proprietors or 1099 contractors).
For more in depth discussion, see this article.