Depending on your needs, the proposed $1.51 trillion Tax Cuts and Jobs Act (TCJA) could be good for some people saving for retirement, or it could mean higher health care costs and fewer tax deductions, among other things, for both retirees and pre-retirees, experts say.

The TCJA,  the 429-page H.R.1 Tax Bill is not a done deal, but now is the time to figure out how the proposed legislation could affect your financial future. 

"Bank on changes," said Jeffrey Levine, CEO and director of financial planning at Blueprint Wealth Alliance. "It's a virtual certainty that what we see today will not be the final version of the bill."

But even if nothing changes, it's not all that bad, said one expert. "On the whole it looks like good news for retirees," said Mark Luscombe, a principal analyst with Wolters Kluwer. "Lower tax rates now and in retirement and tax breaks for retirement accounts are preserved."

And as with most things related to taxes however, not all agree.

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"When all is said and done, if these groups -- retirees and pre-retirees -- look at their effective tax rate under the new proposed act versus their existing returns, they will end up paying more in overall federal taxes," said Jeff Rattiner, the president of Rattiner's Financial Planning Fast Track.

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But here are some of the highlights you need to know now.


  • Reduces the number of individual income tax brackets from seven to four (12%, 25%, 35% and 39.6%)
  • Sets the top tax bracket at 39.6% for married couples earning $1,000,000 per year and individuals earning $500,000
  • Extends the bottom tax bracket to $90,000 for couples and $45,000 for individuals
  • Repeals the taxes paid by large estates starting in 2024, and immediately doubles the estate tax exemption from $5.6 million per person and $11.2 million per married couple for 2018 to $11.2 million per person and $22.4 million per married couple
  • Retains the current pretax contribution limits for IRA, 401(k)s and similar retirement plans
  • Preserves state and local tax deductions only for state and local property taxes up to $10,000
  • Preserves home mortgage interest deduction for existing mortgages, but newly purchased homes would be subject to a new lower debt limit of $500,000, down from $1 million
  • Almost doubles individual standard deduction to $24,400 for married couples and $12,200 for singles in 2018
  • Keeps the current top tax rates on capital gains and dividend income
  • Preserves head-of-household filing status, often used by single parents. The standard deduction for that group is midway between individuals and married couples
  • Increases child tax credit from $1,000 in 2017 to $1,600, plus $300 for each taxpayer, spouse and non-child dependent
  • Repeals the alternative minimum tax (AMT)
  • Repeals an itemized deduction for medical expenses
  • Repeals the tax credit for adoption
  • Repeals the deduction for student-loan interest

See Robert Powell's full story on the changes outlined in the TCJA for each of these highlights.

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