There’s a lot to know about the new tax law changes, but we’ve attempted to capture the information that impacts most taxpayers below. Remember, these changes will not affect your 2017 taxes. There is plenty of time to start planning now for how this impacts you in 2018!
There are still 7 tax brackets, but the rates have been lowered to: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
One goal of the new tax plan is to decrease the number of taxpayers itemizing deductions. To meet this goal, the standard deduction has become much more attractive as it increases from $6,350 to $12,000 for single filers and increases from $12,700 to $24,000 for anyone married filing jointly. The standard deduction isn’t the only thing that increases under the new law. The child tax credit has doubled to $2,000 per child under 17 and it is available to taxpayers who earn higher amounts than previously allowed.
Several tax breaks will remain in 2018 such as the electric car, classroom supplies, and medical expense deductions. Unfortunately, several big tax deductions and exemptions are done. These include the personal exemption, tax deductions for alimony, tax preparation deduction, moving expense, disaster deductions, and bicycle commuter deduction. The state & local tax deduction now has a $10,000 cap.
It has been 27 years since our country has undergone major tax law changes. This is bound to leave most of us with questions and concerns. If you have questions about specific aspects of the new tax laws, I’m happy to help you navigate!