You have heard a lot of chatter about how the Tax Cut and Jobs Act is supposed to help middle-class taxpayers. This is true. Most people in the U.S. will pay less to Uncle Sam. Here are 6 tax cut benefits that apply to you.
1. Your standard deduction is increased to almost double.
If you are single, your standard deduction was $6,350. Now it is $12,000. This deduction for married jointly filers increases from $12,700 to $24,000. This is temporary, the tax rates will return to 2017 levels in 2026.
2. The tax rate for most people is lower.
The tax rate for the lowest tax bracket will remain at 10%. But for everyone else, their tax rates will be lower. If you are single and earn up to $9,525 or married filing jointly and makeup to $19,050, your tax rate is only 10%.
The 7 tax brackets are:
Rate Individuals Married Filing Jointly
10% Up to $9,525 Up to $19,050
12% $9,526 to $38,700 $19,051 to $77,400
22% 38,701 to $82,500 $77,401 to $165,000
24% $82,501 to $157,500 $165,001 to $315,000
32% $157,501 to $200,000 $315,001 to $400,000
35% $200,001 to $500,000 $400,001 to $600,000
37% over $500,000 over $600,000
3. Non-homeowners can deduct state and local taxes or sales tax
You can deduct property taxes and state and local or sales taxes. The total for all combined cannot be greater than $10,000.
4. The deduction for medical expenses is expanded.
You can now deduct medical expenses that are more than 7.5% of your adjusted gross income. That threshold is down from 10% for everyone, except seniors. Their threshold was already at 7.5%
5. You get a bigger child tax credit and a non-child dependent tax credit.
You get a credit of $2,000 per child plus $1,400 of the child tax credit may be refundable. Also, there is a $500 tax credit for each non-child dependent you claim. This can help if you are caring for elderly parents.
6. You can inherit up to $11.8 million tax-free.
The so-called “death tax” is still on the books, but now only applies to inheritances above that amount. For 2018 tax year, $11.8 million per person and changes to $11.40 million per person for 2019 tax year.
This is a quick summary of some of your tax cut benefits. To learn more, consult a professional tax accounting service. In West Palm Beach, Florida, you can call us at (561) 842-1304. We’re eager to hear from you.