How will the new tax law effect you?
One of the biggest changes is lowering the tax rate. It should help most folks…but not by much! So don’t get excited. For example, the top rate dropped from 39.6% to 37%. Not bad! Every little bit helps. You’re probably not in the top rate. But you still should save a few dollars because of the lowering of rates.
Another way that will help a lot of people is the new standard deductions. They are almost doubled for most everybody. What does that mean? Remember, you want to take either the standard deduction, or your itemized deductions (interest on home, taxes paid, charity, medical over 7.5% of your income, etc.,) whichever is higher. Now that they have raised the standard deduction for everyone, it will make it harder to itemize and be helpful. The new standard deductions are:
• $24,000 for Married Filing Joint couples and Surviving Spouses. (Up from $12,700.)
• $18,000 for Heads of Household (Up from $9350.)
• $$12,000 for Single individuals and Married Filing Separately (Up from $6350.)
That sounds like a lot. It is. But you need to know that you used to get $4,050 for each personal exemption that you had. Now you get none. Yep, they eliminated the personal exemption totally.
The government giveth and the government taketh away.
There’s a LOT more coming. Stay tuned!