What changes did we see under the new Trump Tax reform?

The tax cuts and jobs act signed into law by President Trump in December 2017 made significant changes to the tax code. No other change to the US tax code has been more significant in the past decade. It puts more money in the pockets of everyday Americans like you and I. It also puts money in the bank accounts of large corporations. Here’s how the Trump tax reform will affect you when you file your taxes.

Changes to the tax brackets

The modified tax brackets benefit both high and low earners. Tax rates have been reduced and the income ranges for each bracket have increased. So for example, if you’re a single filer earning between $38,701 and $82,500 your tax rate is reduced by 3% from the previous year.

The tax rate for married filing jointly taxpayers earning between $77,401 and $165,000 also goes from 25% down to 22% for the tax year 2018. One of the biggest changes benefiting most filers is that the standard deduction will almost double for the tax year 2018. So for single filers, it goes from $6,350 up to $12,000. And for married filing jointly it goes from $12,700 up to $24,000.

Tax cuts

It’s important to note that the personal exemption for tax dollars that could claim a personal exemption for themselves, their spouse, and their eligible dependents has been eliminated in favor of the higher standard deduction. However, the child tax credit has doubled for qualifying children from 1,000 to $2,000 per child for the tax year 2018. 

The tax cuts and jobs act also cut corporate tax from 35% to a flat 21% across the board. While cutting taxes for individuals and corporations could have a positive effect on economic growth, it will also increase the deficit by billions of dollars.

For more information about the Trump Tax bill and the tax services we provide, contact us today at (610)-351-0889. You can also locate our office at 1028 Hamilton st in Allentown PA.