Recently, the New York Times released an article discussing how the new Republican Tax Bill will cut taxes for roughly 75 percent of filers. The final plan is different than previous plans were for individuals, but there is a lot of variation as to how the bill will affect families across the country. For example, how families earned their money, if they made sizable donations to charity or various other factors can affect how they will be impacted by the new bill.
The new bill also expands the standard deduction. For individuals, the new standard deduction will be $12,000; while the standard deduction for families will be $24,000. It is expected that more people will take the standard deduction with the expansion. If you chose to take the standard deduction, you will no longer be able to deduct charitable donations, mortgage interest and state and local taxes from your tax bill.
The new bill for 2018 will also lower the top marginal rate, expand the child income tax credit, allow $10,000 in state and local taxes to be deducted and raise the exemption for the alternative minimum tax, so fewer people will pay it.
When it comes to seeing how the new bill will affect you, the use of the financial calculator can be extremely helpful. The step by step approach allows you to plug in your information so you can have an idea of what to expect when tax season rolls around. The financial calculator will not be able to predict changes in the economy or how people’s behavior may change in response to the new bill.
As far as the changes to the tax code with the new bill, most of them will expire after 2025. This will cause a tax increase for most families after this point. Republicans are claiming that they will not allow these provisions to expire, but predicting what will happen almost a decade from now is challenging.
SD Associates also offers numerous financial calculators to help determine how to plan for any of life’s financial decisions. To take advantage of the numerous financial calculators SD Associates offer, visit our website today so you can get a head start on tax season.