Tax time is here, and with it comes a new set of rules and regulations. The Tax Cuts and Jobs Act of 2017 has made some major changes to the tax code, and it’s important to understand how these changes will affect you. Here’s what you need to know about the updated tax code.
First, the standard deduction has been nearly doubled. This means that if you don’t itemize your deductions, you can take a larger deduction on your taxes. The new standard deduction is $12,000 for individuals and $24,000 for married couples filing jointly.
Second, the personal exemption has been eliminated. This means that you can no longer deduct a certain amount for each person in your household. However, the child tax credit has been increased to $2,000 per child, and the income limits for claiming the credit have been raised.
Third, the tax brackets have been changed. The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The income levels for each bracket have also been adjusted, so it’s important to check the new brackets to see which one applies to you.
Fourth, the Alternative Minimum Tax (AMT) has been adjusted. The AMT is a separate tax system that applies to certain taxpayers with high incomes. The new AMT exemption amounts are $70,300 for individuals and $109,400 for married couples filing jointly.
Finally, the deduction for state and local taxes (SALT) has been limited. You can now only deduct up to $10,000 in state and local taxes. This includes income, sales, and property taxes.
These are just a few of the changes to the tax code. It’s important to understand how these changes will affect you so that you can make the most of your tax return. Be sure to consult with a tax professional if you have any questions or need help filing your taxes.