WICHITA FALLS, TX (TNN) - New tax law changes in the Tax Cuts and Jobs Act go into effect this year.
Certified Financial Planner Gary Silverman said the biggest changes include: the almost doubling of the standard deduction, and the elimination of itemizing things such as charitable donations, property taxes, and mortgage interest.
So, what do those changes mean for, say, a married couple whose standard deduction went from $12K to $24K?
Silverman stated, “The idea of the standard deduction is, you don’t have to go through all the itemization. It’s all captured as, ‘We’re going to assume you get at least $24K of deductions’.”
However married couples face another big change. Personal exemptions for them have gone away.
“A married couple has lost over $8K in personal exemptions. They’re going to end up having more taxable income that way,” Silverman said.
However it is important to remember, as Silverman said, the impact of the changes in standard deductions, itemization, and personal exemptions will be different for everyone depending on their income, household and marital status.
“It really depends on your particular tax situation. obviously, somebody who’s making $400K a year is going to be in a completely different situation making $70K. Somebody with four children is going to make a big difference compared to somebody with none.”
Another change written into the law deals with new tax brackets. The percentage has lowered for all taxable incomes. So, for someone making $82K a year, their tax rate went from 25% to 22%.
There has also been a change to the Child Tax Credit. It has gone up from $1,000 to $2,000.