6. Still No Limitation on Itemized Deductions
Itemized deductioners, rejoice! There still no limit in sight. Before 2018 you were limited if your income was too high, but thanks to the Tax Cuts and Jobs Act, this limit was abolished for itemized deductions- and this new rule will stay in place until 2025.
Your itemized deductions for taxes paid, charitable gifts, interest paid, job expenses, and other deductions will be available until 2025, after which we have to look out for any changes. Either a new tax law will be passed or the limitation on itemized deductions based on income will be restored.
For some, though, this might not even matter at all since they might opt for the standard deduction, especially since it doubled thanks to the Tax Cuts and Jobs Act.
7. Personal Exemptions Remain Unavailable
The Tax Cuts and Jobs act changed more than the itemized and standard deduction. Back then, what was known as the personal exemption was $4,150, but this was eventually eliminated.
However, have you ever wondered why Uncle Sam decided to do without this personal exemption?
You used to be able to claim one per dependent, including yourself and your spouse if you were married and filing jointly, plus anyone who qualified as an additional dependent. By eliminating this, Uncle Sam decided to give the standard deduction a massive boost.
There may be changes in the future, though, as it’s not impossible for the personal exemption to return. But, for 2021, if you were hoping for this exemption then you may as well go for the standard deduction.