Tax season is upon us, and with it comes the latest changes to tax rates. With the new tax laws in place, it’s important to understand how they affect you and your finances.
The most significant change to the tax code is the new tax brackets. The new tax brackets are based on income levels, and the rates are lower than they were in 2017. For example, the top tax rate for individuals is now 37%, down from 39.6%. This means that if you make more than $500,000, you’ll pay a lower rate than you did last year.
In addition to the new tax brackets, the standard deduction has also been increased. This means that if you don’t itemize your deductions, you’ll be able to deduct more of your income from your taxes. The new standard deduction is $12,000 for individuals and $24,000 for married couples filing jointly.
Another change to the tax code is the elimination of the personal exemption. This was a deduction that allowed taxpayers to deduct a certain amount of their income from their taxes. The personal exemption has been replaced by an increased child tax credit. The new credit is worth up to $2,000 per child, and it’s available to families with children under the age of 17.
Finally, the new tax laws have also changed the way that certain deductions are calculated. For example, the deduction for state and local taxes (SALT) has been capped at $10,000. This means that if you pay more than $10,000 in state and local taxes, you won’t be able to deduct the full amount from your taxes.
These are just a few of the changes to the tax code that could affect you this year. It’s important to understand how the new laws will affect your finances so that you can make the most of your tax return. If you have any questions, it’s best to consult a tax professional to ensure that you’re taking advantage of all the deductions and credits available to you.