A massive tax overhaul, the Tax Cuts and Jobs Act, was signed into law at the tail end of 2017. The changes take effect January 1, 2018, which means they will go into effect during the next tax year — it shouldn’t affect your taxes filed in April of 2018.
Here are some of the most notable changes, considering the tax topics covered in Get Money.
- An increase in the standard deduction. The standard deduction, which is currently $6,350 for individuals, will increase to $12,00. For married couples filing jointly, it will increase to $24,000. This makes it less appealing to itemize your deductions using Schedule A. Many taxpayers who itemize will be better off switching to the standard deduction. More info here.
- A (temporary) increase to the child tax credit: The child tax credit will nearly double to $2,000, and $1,400 of that is refundable, which means that if the credit is more than you have to pay in taxes, you can get a refund of up to $1,400. But the credit will expire in 2025. More info here.
- Property tax: There’s now a $10,000 limit on how much state and local tax you can deduct from your federal taxable income, and that includes property taxes. More info here.
Good news for student loan borrowers: student loan interest is still deductible, even if you take the standard deduction.
Tax brackets will also change, though. The new tax brackets for individual filers are as follows:
|New Tax Rate||New Income Bracket|||||Old Tax Rate||Old Income Bracket|
|10%||Up to $9,525|||||10%||Up to $9,525|
|24%||$82,500 – $157,500|||||28%||$93,700-$195,450|
You can check out the rest of the brackets for married taxpayers here.
This CNN calculator shows how the changes will affect you, depending on your income.