There’s a lot of debate on whether the Tax Cuts and Jobs Act of 2017 will help grow our economy or add trillions in debt to the federal balance sheet.  While only time will tell the true impact on the U.S. economy, most of our clients are more concerned about the bottom-line impact on their personal taxes.  At first blush, it appears some of our clients may see tax savings while others may wind up with more taxes due.  To help give you an idea of how this could impact your taxes, I’ve listed several items that stand out to me as the most likely to impact the taxes of our clients

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What the Tax Cuts & Jobs Act of 2017

Could Mean for You

Tax Bracket Shift- Tax brackets will make a slight shift down.  Current tax brackets are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.  The bill shifts these to 10%, 12%, 22%, 24%, 32%, 35%, and 37%.  The good news is that many may see a slight decrease in marginal tax rates (the amount of tax paid on the top bracket of earned income).

Marriage Penalty Relief- The marriage penalty has hurt high-earning couples as it taxed them at higher rates than two individuals making the same combined income.  For most married couples, you’ll see that penalty has been removed.  As a result, you should be in the same tax bracket as two individuals earning the same combined income from your first dollar earned through $600,000 of combined income.  For those earning greater than $600,000 per year, you could see income taxed at higher rates on that excess income.

Deductions- While the bill provides a slight increase to the Standard Deduction ($12,000 for Single and $24,000 for Married versus a combined Standard Deduction and personal exemption of $10,400 Single/$20,800 Married), those who live in high-tax states could see a reduction in itemized deductions.

The new tax law will cap state, local, and property tax deductions at a combined total of $10,000. For those living in states such as California, DC, Maryland, New Jersey, and New York, the cap could be especially painful given high state income taxes and property values.

The bill also repeals deductions that include tax preparation fees, investment advisory fees, and unreimbursed business expenses.

For those looking to buy a new home, the bill caps the deduction of interest to the first $750,000 of mortgage principal (down from the current $1,000,000).  The good news is this was initially looking like a cap of $500,000 which likely would have impacted a much greater portion of the population.

The good news for parents is that the Child Tax Credit has been doubled to $2,000.  In addition, the income phase outs for the credit have been increased to $200,000 for individuals and $400,000 for married couples (up from $75,000 and $110,000 respectively).

401k Loans-  Currently, when someone leaves their job, they need to pay off any existing 401k loans or pay interest and a penalty on any remaining balance.  The bill allows for former employees to roll those loans into an IRA after termination.  For those with outstanding 401k loans, repaying those loans at termination is often a reason to stay with their current job.  Now job seekers can have a way to leave their current employer without having to pay a large tax/penalty on the 401k loan should they roll that to an IRA and continue meeting the terms of the loan.

529 Plans- Until now, 529 plans could only be used to fund post-secondary schooling.  The new tax law allows for distributions of up to $10,000 per student, per year for public, private, or religious schools from elementary through secondary schooling.

This is a big win for parents.  Funding 529 plans only for college increases the risk that their child might not use all the savings.  Also, parents may want to send their child to a private high school but might not have sufficient cash flow to pay tuition.  If their child has a 529 plan, they can now use that account to help offset the high school’s tuition.

2025 Sunset- Keep in mind that these changes are currently temporary for individuals.  Unless something is enacted prior to 2025, taxes for individuals under the Tax Cuts and Jobs Act of 2017 will revert back to 2017’s laws.  Corporate tax changes were made permanent under the bill.

Still unsure how this will impact you?  You’re not alone.  If you’re interested in learning more about how these changes could impact your bottom line, you can get a rough idea with this calculator:  The site also offers a link for a 2017 estimate of your taxes to allow you to compare the two years.

I highly recommend reaching out to your CPA as soon as possible to see if you can do anything prior to the end of 2017 to help minimize your taxes for the year.  Also, you may want to find some time in early January (before tax season heats up) to strategize with your CPA and financial advisor about tax planning for 2018 and beyond.

More information- This article only addresses a few of the changes that could come with the Tax Cuts and Jobs Act of 2017.  Here’s a more thorough piece on the many changes:

The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual.  This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.



Businesses for the Bay

We’re proud of the work we do to help the environment and happy to help support organizations such as Alliance for the Chesapeake Bay:

Monday, January 1st

Our office and US markets will be closed on Monday, January 1st for New Years.  Have a wonderful start to 2018!

Monday, January 15th

Our office and US markets will be closed on Monday, January 15th in observance of Martin Luther King, Jr. Day.

Just a Reminder

We are always accepting donations for the local animal shelters – toys, tennis balls, collars, leashes, food, cat litter, cardboard trays, office supplies, cleaning supplies, towels, mats, washcloths, etc. We will accept donations Monday-Friday between 9am & 5pm.


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Snow Yummy!


Elise told us that they’ve been singing “Let it Snow” at school in hopes that it would snow.  Apparently, Mother Nature listened as we recently had our first taste of snow.  While the sidewalks and roads were too warm for the snow to stick, we did have a light accumulation on our deck.  Elise sampled some, had a blast playing snowball fetch with the dogs, and enjoyed our snowball fight.

Fenway ate snowballs as fast as we could toss them to him and Roxy was even more excited to play in the snow than past years.  My guess is that the relative warmth outside played a factor in Roxy’s enjoyment.

Heidi, Elise, Fenway, Roxy, and I wish you the best throughout the holiday season and look forward to speaking with you in 2018!

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I hope you enjoyed this month’s newsletter.

Best Wishes,


Woody Derricks, CFP®, ADPA®


CA Insurance License #0C40217


Available by Appointment in Alexandria & DC

As a Registered Investment Advisor, Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started.


Certified Financial Planner Board of Standards Inc. owns the certification mark CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.