Tax reform is a hot topic in the United States right now, and it’s important to understand how it could affect your finances. The Tax Cuts and Jobs Act of 2017 was the most sweeping tax reform in decades, and it has had a significant impact on individuals and businesses alike.
For individuals, the most notable changes are the new tax brackets and the increased standard deduction. The new tax brackets are lower than the previous ones, meaning that most people will pay less in taxes. The standard deduction has also been increased, which means that more of your income is exempt from taxation. This could result in a lower tax bill for many people.
In addition, the new tax law has also changed the way that certain deductions are calculated. For example, the mortgage interest deduction has been capped at $750,000, and the state and local tax deduction has been limited to $10,000. These changes could have a significant impact on your finances, depending on your situation.
The new tax law also includes changes to the way that businesses are taxed. The corporate tax rate has been reduced from 35% to 21%, and the pass-through rate has been lowered from 39.6% to 29.6%. These changes could result in more money for businesses to invest in their operations, which could lead to more jobs and higher wages.
Overall, the new tax law could have a significant impact on your finances. It’s important to understand how the changes could affect you so that you can make the best decisions for your financial future. If you have any questions about how the new tax law could affect you, it’s best to consult a tax professional.