Tax season is upon us, and with the new tax code in place, it’s important to understand the changes and how they may affect you. Here’s what you need to know about the new tax code and how to make sure you’re filing correctly.
The new tax code is the most significant overhaul of the U.S. tax system in decades. It includes changes to individual and corporate tax rates, deductions, credits, and more. The most notable changes are the new tax brackets, which are lower than the previous ones, and the doubling of the standard deduction.
For individuals, the new tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The standard deduction has been doubled to $12,000 for single filers and $24,000 for married couples filing jointly. The personal exemption has been eliminated, but the child tax credit has been increased to $2,000 per child.
For businesses, the corporate tax rate has been reduced from 35% to 21%. The new tax code also includes a 20% deduction for pass-through businesses, such as sole proprietorships, partnerships, and S corporations.
In addition to the changes to tax rates and deductions, the new tax code also includes changes to the way certain items are taxed. For example, alimony payments are no longer deductible for the payer, and the mortgage interest deduction has been capped at $750,000.
It’s important to understand the changes to the tax code and how they may affect you. If you’re unsure of how to file your taxes correctly, it’s best to consult a tax professional. They can help you understand the new tax code and make sure you’re filing correctly.
Tax season can be stressful, but with the right preparation and understanding of the new tax code, you can make sure you’re filing correctly and getting the most out of your tax return.