2018 TCJA, What Is That?
In December of 2017, President Trump signed a bill called The Tax Cuts and Jobs Act, hence the acronym TCJA.
Do you want to know how the 2018 TCJA affects you?
Let’s find out!!
Here's my Top 4 Tax Changes due to the 2018 TCJA.
First…
Personal and dependent exemptions are suspended until 2026.
Here’s what that may mean for you:
If you have a Big Family and are used to taking all those dependent exemptions plus yours (and your spouses), the exemptions are now suspended.
Sorry! NO MORE exemptions for you!
No more 4K extra per person exemptions for yourself and your dependents.
Next…
New standard deductions go for everyone across the board.
For Single & Married Filing Separately filers
Their standard deduction has increased to 12K for the year from $6,350 in 2017. This may seem like a lot but as a Single or Married Filing Separately filer, you still could get an extra exemption for your dependent(s).
Head of Household filers standard deduction increased to 18K for the year from $9,350 in 2017.
Married Filing Jointly or Qualifying widow(er) filers standard deduction increased to 24K for the year from $12,700 in 2017.
This makes up for the personal and dependent exemption
loss.
This is pretty helpful to the married filing jointly filers that have no children or have only 1 child. If you have a Small Family with no children or just one child, this works in your favor. Yay!!!
And Then There's This…
New Lower tax rates
Old Tax rates: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%
New TCJA Rates: 10%, 12%, 22%, 24%, 32%, 35%, 37%
Let’s put that in perspective:
Just using the middle tax rate of 24%
For the head of household, single and married filing separately filers your TAXABLE income has to be more than $82,500 but less than $157,500.
For married filing jointly filers your TAXABLE income has to be more than $165,000 but less than $315,000.
This is excellent news for some of you.
If we go down memory lane, back in 2017.
As a single or head of household filer, you would be between a 25% and 28% tax rate.
As a married filing jointly or married filing separately filer you would be between a 28% and 33% tax rate.
Here’s One More…
Child Tax Credit Increased through 2025.
The child tax credit maximum has increased from $1,000 to $2,000 per qualifying child.
The refundable portion of the credit has increased from $1,000 to $1,400.
The child tax credit begins to phase out for taxpayers with a modified adjusted gross income of over $200,000 for single and head of household filers or $400,000 for married filing jointly filers which have more than double the 2017 phase-out amounts.
Sad and Amazing right?
Let me know your thoughts…