Your Guide To 2018 Tax Changes
Well, it’s about time, 2018 tax changes. President Trump signed the new tax bill this past December. The Republican Party has settled on a final tax bill which. The bill represents significant changes to the federal income tax brackets as well as deductions. The changes below won’t affect your 2017 tax returns but come 2018, all modifications come into play.
Tax Brackets and Rates:
The new 2018 tax brackets are still at seven, even though President Trump aimed for only three in the past. For people making just a tad less than $10,000 a year, the tax rate will be at 10%. For those making between, $82,501 to $157,500, the tax rate is at 24%. Overall, tax rates have gone down. For your full guide to 2018 tax changes just look at the breakdown below, including if married couples file jointly.
The top tax rate will decrease as well, going from 39.6% to 37%, while the lowest one is still the same but covers twice the amount of income it used to.
Another big 2018 tax change is that the marriage penalty is mostly gone just like President Trump and more Republican leaders wanted. With the new changes, the married filing jointly income thresholds are exactly double the single, except for the two highest brackets. This means the marriage penalty is gone for everyone but married couples making over than $400,000.
Your guide to 2018 tax changes also includes standard deductions, which has almost doubled for all filers. The personal exemption has been eliminated. A single filer used to have a right to $6,500 standard deduction and $4,150 personal exemption for a total of $10,650. Come 2018, there’s just one total of standard deduction at $12,000. Look below for more of a breakdown:
Short-term Capital Gains and Child Tax Credit:
Stock sales and sales of appreciated assets are still taxed as ordinary income, but because that has changed a bit, capital gains will too. Since there’s no more personal exemption, the expanded Child Tax Credit doubles the credit from $1,000 to $2,000. If you have kids that are 17 or older, or take care of elderly relatives, you can claim a non-refundable $500 credit.
The Child and Dependent Care Credit is still available, allowing parents to deduct qualified child care expenses. That’s equal to $1,050 for one child under 13 years old or $2,100 for two kids. There’s more for help with kids, with up $5000 of income that can go into a flexible spending account on a pre-tax basis to make child care more affordable.
It’s important to understand the new laws, and how they affect you and your day-to-day operations. So set up an appointment with MOA Accounting by calling 305.868.7620 and learn more about what a credible accounting firm can do for you.