Highlights of tax law changes for 2018

With the enactment of the Tax Cuts and Jobs Act (TCJA) on Dec. 22, 2017, substantial changes were made to the taxation of individuals, businesses, multinational enterprises, and others. While a full review of the provisions of the TCJA is not possible to provide here, below are highlights of the TCJA, generally in effect for the 2018 tax year, for shareholders of Delaware Funds® by Macquarie mutual funds.

Tax rates modified

The TCJA retains seven possible tax rates at which ordinary income is taxed (depending on income level) for individuals, with modified tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%, effective for tax years beginning in 2018.

Capital gains and qualified dividend tax rates unchanged

The current system whereby net capital gains and qualified dividends are generally subject to tax at a maximum tax rate of 20% or 15% remains in place.

Roth recharacterization eliminated

The TCJA repealed the special rule permitting recharacterization of Roth conversions, for tax years beginning after Dec. 31, 2017. For example, a conversion contribution establishing a Roth IRA during a tax year can no longer be recharacterized as a contribution to a traditional IRA (thereby unwinding the conversion).

Changes made to the alternative minimum tax (AMT)

The TCJA eliminated the corporate AMT for tax years beginning after Dec. 31, 2017.

The AMT for individuals remains, and the TCJA temporarily increased the exemption amounts and phase-out thresholds, with the modified amounts scheduled to sunset on Dec. 31, 2025.

The information contained in the Tax Center is not intended to be legal or tax advice. If you need assistance preparing your tax return, please consult a tax advisor.

Information may be abridged and therefore incomplete. Any discussion pertaining to taxes in this communication (including attachments) may be part of the promotion or marketing of a product. Advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor.