The tax code is constantly changing, and it can be difficult to keep up with the latest updates. With the recent passage of the Tax Cuts and Jobs Act, there are a number of changes that could affect your taxes. Here’s what you need to know about the updated tax code.
First, the standard deduction has been nearly doubled. For 2018, the standard deduction is $12,000 for single filers and $24,000 for married couples filing jointly. This means that more of your income will be exempt from taxes.
Second, the personal exemption has been eliminated. This means that you can no longer deduct $4,050 for each person in your household. However, the child tax credit has been increased from $1,000 to $2,000 per child.
Third, the tax brackets have been adjusted. The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top rate of 37% applies to income over $500,000 for single filers and $600,000 for married couples filing jointly.
Fourth, the alternative minimum tax (AMT) has been adjusted. The AMT is a separate tax system that applies to certain high-income taxpayers. The new tax law increases the exemption amounts and phase-out thresholds for the AMT.
Finally, the tax law includes a number of other changes, such as the elimination of the deduction for state and local taxes, the elimination of the deduction for miscellaneous itemized deductions, and the elimination of the personal exemption phase-out.
It’s important to understand how the new tax law affects you. Be sure to consult with a tax professional to ensure that you’re taking advantage of all the deductions and credits available to you.