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The New Year is Here – What Does that Mean for Taxes?

January 15, 2018

2018 Tax Changes | What to look for

Since it’s the first working day of the new year (as of my writing this on January 2), I thought I would do a little forecasting to get us off on the right foot for 2018. Tax season is just around the corner again, and many of us who have had taxes floating in the backs our minds during the holiday chaos. Now that the holidays have passed, it’s time to look at those worries—and get some answers!

Below is a partial list of tax plan changes, but of course, seeing how this pertains to you and your plan is the key.

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  • Old Plan – 7 tax brackets with a top rate of 39.6%.
    • New Plan – 7 tax brackets with a top rate of 37%.
  • Old Plan – You get a $1,000 tax deduction per child.
    • New Plan – That goes up to $2,000 per child.
  • Old Plan – You can deduct medical expenses if they exceed 10% of your adjusted gross income.
    • New Plan – That number goes down to 7.5%.
  • Old Plan – If you don’t have health care and don’t buy Obamacare, there’s a penalty.
    • New Plan – The penalty goes away.
  • Old Plan – If you inherit over $5.49 million you pay a 40% federal tax.
    • New Plan – The number goes up to $10 million before the tax kicks in.

When it comes to the new tax bill, I believe this will prove to be one of the things that define the Trump presidency. I know, many of you are not Trump fans, but I do hope you admit that any help on taxes is a step in the right direction.

From what I’ve been able to see, it will start by giving the clear majority a little more in their take-home pay. Whether you are still working or already retired, the new standard deduction should give us a tad bit more leniency and eliminate the need to compile copious amounts of receipts, trying to get to the same result. For our kids and grandkids who now have children, they should also benefit by having a higher child deduction, which, again, should put more in their pockets.

If you have more questions, consult your CPA, or come and meet with us and we will introduce you to our CPA.