03 Jul How the Tax Cuts and Jobs Act Impacts You
The already famous Trump’s Tax Law has been in effect for quite some time now, but there are still many people who don’t understand how it affects them.
If you’re one of them, you have nothing to be ashamed of – many people don’t understand nor should they attempt on their own as it’s very confusing – just like every tax law has always been!
That’s why we wanted to give you all the details about it that you should know, but because we’ve already explained it before – we can talk about how it affects you and others like you.
How Trump’s Tax Cuts and Jobs Act Impacts Individuals
The most important thing the new tax act did for regular taxpayers is lower tax rates and simplify income tax for most taxpayers.
Here are some changes that might be meaningful to you:
- The standard deduction for individuals is now nearly doubled and stands at $12,000.
- The same deduction for married couples is $24,000.
- The number of individuals taking this deduction has increased to around 90%, which means that you might be among them if you weren’t already.
- Personal exemptions are eliminated in this act, which results in people with many children paying more than they used to pay before the new law.
- The income tax rates have been lowered for people with incomes between $9,525 up to $200,000, while it is now higher for those with incomes of $500,000 or more. The other income brackets still have the same taxes. The brackets themselves have remained the same as with the previous law.
- All the rates will revert to their previous levels in 2026 unless some other change is made in the future.
- Most itemized deductions have been eliminated, which has affected truckers mostly, among several other professions. This also affects people paying alimony as they can no longer deduct these amounts, while those on the receiving ends can.
- The deductions for retirement savings and student loan interest are still the same, which is essential to note.
- New mortgage holders can now get the deductions for only the first $750,000 of the loan.
- You can deduct up to $10,000 now on local and state taxes.
- The deductions for medical expenses are now higher.
- The child tax credit is now doubled – and stands at $2,000.
When all impacts are taken into account, several positive things become clear:
- 80% of taxpayers now have a lower tax liability.
- 15% of taxpayers have seen no change.
- 5% of taxpayers now pay more taxes than they did before the new act.
All in all, the many changes have affected most people across the country, and those with the lowest earnings do have several things which allow them to pay fewer taxes.
There are naturally many other changes which the act has brought, but they are not important for individual taxpayers or haven’t affected you in a way for which you should be concerned.
If you do have some more questions or are looking to get some help with the IRS, feel free to contact us whenever it suits you.