Monday , April 22 2024

Tax Reform: What You Need to Know

Tax reform is a hot topic in the United States right now, and it’s important to understand what it means and how it could affect you. Tax reform is a broad term that refers to changes in the way taxes are collected and distributed. It can include changes to the tax code, such as reducing or eliminating certain deductions, or it can involve changes to the way taxes are collected, such as increasing or decreasing tax rates.

The most recent tax reform was passed in 2017 and is known as the Tax Cuts and Jobs Act. This act made significant changes to the tax code, including reducing the number of tax brackets, increasing the standard deduction, and eliminating certain deductions. It also lowered the corporate tax rate from 35% to 21%.

The goal of tax reform is to make the tax system simpler and fairer. It is also intended to stimulate economic growth by encouraging businesses to invest and hire more workers.

For individuals, the most significant changes are the lower tax rates and the increased standard deduction. The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The standard deduction has been nearly doubled, from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples filing jointly.

The new tax law also eliminates certain deductions, such as the personal exemption and the state and local tax deduction. It also limits the mortgage interest deduction to loans of up to $750,000.

For businesses, the most significant change is the reduction in the corporate tax rate from 35% to 21%. This is intended to make the United States more competitive with other countries and to encourage businesses to invest and hire more workers.

Tax reform is a complex issue, and it’s important to understand how it could affect you. If you have questions about how the new tax law could affect your taxes, it’s best to consult a tax professional. They can help you understand the changes and how they could affect your taxes.

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