This year the standard deduction is $6,300 for most single filers and $12,600 for most married couples. Ryan’s plan would double these amounts and Trump’s would raise them to $15,000 for singles and $30,000 for couples.
Beyond these common goals, details in the proposals differ. In general, Trump’s plan would cap itemized deductions at $100,000 for singles and $200,000 for couples. Ryan’s and Camp’s plans would eliminate all itemized deductions other than ones for charitable gifts and mortgage interest, and Camp’s would impose new limits on the remaining two.
Whether tax changes take effect in 2017 or 2018 is unclear and depends in part on how fast lawmakers act. But here are moves to consider.
Charitable donations: Because tax benefits for charitable donations could get a haircut or a whack next year, tax advisers are telling donors to think about speeding up tax-deductible gifts—especially major ones—to maximize these breaks.
Remember two tax-smart techniques. "Donor-advised" funds allow givers to take deductions this year, invest the donation, and then make grants to charities from the fund as desired over time. These mini-foundations have grown in popularity and now have nearly $80 billion in total assets, compared with $34 billion five years ago, according to data from the National Philanthropic Trust.
In addition, donors often reap valuable tax benefits when they contribute appreciated assets such as stock shares instead of cash to charities, including to donor-advised funds. Often there is no tax on the appreciation and the taxpayer can take a deduction for the asset’s fair-market value.
State and local taxes: The days of this deduction may be coming to an end. Already, about 4 million Americans, many from high-tax states, lose this write-off because they owe the alternative minimum tax, according to the Tax Policy Center in Washington. And people who get this break tend to live in high-tax “blue” states such as California, New York, New Jersey and Massachusetts.
For taxpayers who do benefit from this deduction, it could make sense to pay 2016’s remaining balances before year-end, says Jeffrey Porter, a certified public accountant who practices in Huntington, W.Va.
Mortgage interest: Real estate advocates are powerful, but the value of this deduction dropped in recent decades and may be in for further shrinkage if taxes change next year. So don’t buy a first or second home if you need the current law’s benefits to afford it, says Mr. Porter.
And don’t rush to prepay next year’s mortgage, he adds, as taxpayers can’t take deductions for prepaid interest expenses.