Staying up-to-date with the new tax changes can feel like a daunting task, especially with all of the changes that were implemented for 2018. The TCJA (Tax Cuts and Jobs Act) is one of the largest pieces of tax reform legislation that has been passed in the last 30 years! With so many changes it’s no wonder that
48% of Americans don’t understand how these new laws will affect them!
But, don’t worry, we’ve done the hard work for you!
Here are 3 major ways the new tax plan will affect you this season-
- New Tax Bracket Rates
Every year the IRS will adjust tax provisions for inflation, this is done to prevent people from being pushed into higher tax brackets. All filers will now be adjusted for inflation; In 2017 the federal income tax bracket included the following rates; 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%
As you can see below the new tax plan still has 7 tax brackets but the rates have slightly changed to 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
Check the table below to see how your tax bracket has changed:
|Rate||Unmarried Individuals, Taxable Income Over||Married Individuals Filing Joint Returns, Taxable Income Over||Heads of Households, Taxable Income Over|
Changes to Mortgage Interest Deductions
Moreover, new limits for mortgage interest deductions have been placed under the Tax Cuts and Jobs Act. In the past, you could deduct interest up to $1 million of mortgage debt and $100,000 of debt from a home equity loan. But, as of 2018 the limit has changed to $750,000 and $375,000 if you’re married and filing separately.
Child Tax Credit Changes
According to the IRS, the maximum credit for 2018 has increased to $2,000 per child under the age of 17. Additionally, the income threshold at which the credit begins to phase out has also increased- therefore if you make up to $200,000/yr you can now qualify for CTC ($400,000 for joint filers).
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