It has taken 3 decades to have new tax reforms, and finally, it’s here with us. The largest tax reforms legislation will definitely affect taxpayers in so many ways. The effects will, however, be evident in 2019 since in 2018 people will be filing their 2017 returns. Most of us are probably wondering how these tax reforms will impact us. But don’t worry since we have covered some major tax provisions and how they will affect you:
Corporate tax will reduce to 20% from the current 35%. This will make some business deductions to be reduced or eliminated. In regards to corporate income tax, the new reforms will change the US tax systems from global to territorial. This means that each subsidiary will only pay the country’s tax rate where it’s established. This is beneficial to corporations in countries with a lower tax rate.
Individual Income Tax
This will see lots of changes; from changing the tax brackets to the income threshold, and even to tax rates. They have been reduced until 2025. The seven tax brackets remain the same with changes in the rates and the income threshold from 12 percent all the way to 37 percent. Additionally, the threshold for single and married filers will increase significantly. This will prompt lower tax rates and increased income ranges. In case of inflation, the tax brackets will move slowly due to the different inflation measure that will be used other than Consumer Price Index. This tax law increases the standard deduction, especially for married filers than it does for single filers. Therefore, people who itemize will reduce in number.
Child Tax Credit
This will be doubled to $2,000 with the refundable amount growing to $1,400. Other dependents other than children get a non-refundable $500 credit.
Mortgage interest deduction will be lowered whereas the interests on home equity loans won’t be deductible anymore. The law limits state and local property taxes that can be deducted. This will be more beneficial to those living in higher-income areas.
The tax law repeals the mandate that requires people to have health insurance or risk penalties.
Self-Employed and Small Businesses
This bill offers countless business chances with the reduction of the top corporate rate and the reduced deduction of income from some pass-through entities. Pass-through entities pay their taxes at individual rates.
This bill comes with certain miscellaneous tax provision like:
- Private jet companies are exempted from the federal excise tax that has previously been levied on commercial flights.
- Excise taxes on alcohol have been reduced for two years.
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You don’t have to memorize all of these tax laws since you will use them in 2019 when filing the 2018 tax returns. You can use TurboTax to help you keep you up-to-date with the new tax laws. At Money 4 You Payday Loans in Utah, we offer instant loans to help you in times of crisis. Contact us today for more information! Feel free to apply online for quick cash today!