Will Your 2018 401(k) Tax Break Be $18,500 -- or $2,400?
Congress is hard at work trying to turn the Trump tax plan into legislation that can make it through both the House and the Senate, and with only a slim majority of Republican senators, party leaders have to be sensitive to the wishes of every single individual senator. With some Republicans still opposed to deficit-widening changes to the tax laws, lawmakers are looking closely at one of the most often-used tax breaks for American workers: the deduction for 401(k) contributions. Currently set at $18,000 in 2017, taxpayers would ordinarily have anticipated an inflation-linked increase in the maximum contribution they could make to their 401(k)s in 2018. Yet tax reform proponents are considering moves that could dramatically reduce the amount you'll be able to deduct from your taxes for 401(k) contributions next year.
From a saver's perspective, 401(k)s are an excellent way to shelter money from taxes. The $18,000 that you can save in a 401(k) this year is one of the largest tax breaks available to average Americans, and because of increases in inflation, that number is slated to go up to $18,500 in 2018 -- if lawmakers don't cut it back.
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Source: Fool.com
