The U.S. Congress passed sweeping new tax reform legislation this week. Most commentators agree that it contains some of the most significant changes to federal income tax law since 1986. City National Bank offers a brief overview of the changes here.

But while it has been touted as groundbreaking in terms of the big picture, what really matters is how the changes will affect you and your family.

Will your tax rate increase or decrease? Will you be able to take the same deductions you have been taking over the years - or even add new ones? It will take time to sift through all the implications of the legislation, which has been touted as "once-in-a-generation" tax reform.

“It's a good idea to set up regular meetings with your tax advisor to stay posted on the ramifications of this act and how the developments will impact you," said Paul DeLauro, senior vice president of wealth planning at City National Bank.

As you watch and learn more about the tax law, be on the lookout for changes to these four areas, which could potentially make a difference in your tax liability.

1. Equities

“The general feeling is that the tax cut will be good for those who own equities," said Paul Single, managing director and senior portfolio manager at City National Rochdale. “Financial stocks, retailers and small cap stocks should all do well, and we'll probably see a nice rally in stocks next year."

The Senate's original version of the new tax bill included a “first-in, first-out" (FIFO) rule, which could have limited investors' flexibility in selling their shares and might have required them to pay potentially higher capital gains taxes on their earliest holdings.

However, the FIFO rule was removed from the final legislation. That means investors will be able to choose which shares to sell, allowing them to offset a gain with a loss for tax liability.

2. Charitable Gifts

The new tax bill proposes to sharply increase the standard tax deduction to $24,000 for a married couple or $12,000 for a single, which will likely result in many fewer people itemizing their deductions.

But if your itemized deductions are typically higher than $12,000 individually or $24,000 as a couple, you'll benefit more from charitable giving.

That's because currently, taxpayers can only deduct up to 50 percent of their adjusted gross income for cash gifts made to public charities. The new bill would increase that amount to 60 percent.

“Say you're retired and living off investments - and your adjusted gross income is just $10,000. If you make a $100,000 cash gift to a public charity, currently you'd only be able to deduct $5,000 of that gift," DeLauro explained. “Under the new tax law, you could deduct $6,000."

3. Mortgage Interest

Homeowners can now deduct the interest on the first $1 million of mortgage debt on their homes. The new law reduces that deduction to the first $750,000 of mortgage debt.

If you live in an area with high-priced real estate, such as California or New York, and you move to a new home, you may be facing higher tax liability under the new rules. They apply to mortgages on property purchased after Dec. 15; current home mortgages would not be affected.

Interest on home-equity loans or lines of credit is currently deductible up to $100,000; that deduction will no longer exist.

4. Pass-Through Entities

The tax law slashes the top corporate tax rate from 35 percent to 21 percent. Owners of "pass-through entities," such as partnerships and sole proprietorships, currently pass their business income through to their personal returns and it is taxed at their individual rate.

Under the new tax law starting in 2018, taxpayers would generally be able to deduct 20 percent of their qualified business income from pass-through entities, subject to some income limitations. That “could be a huge tax drop for very high-income-earning taxpayers," DeLauro said.

Important Disclosures

City National Bank, its managed affiliates and its subsidiaries, as a matter of policy, do not give tax, accounting, regulatory or legal advice. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. You should consult with your other advisers on the tax, accounting and legal implications of any proposed strategies based on your particular circumstances.

City National Bank provides investment management services in conjunction with City National Rochdale, its wholly-owned subsidiary.

Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this document and are subject to change.

All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future results.