President Trump and Congress passed a bill called the Tax Cuts and Jobs Act in December 2017. This bill changed different aspects of the tax code for individuals and corporations. For most people, they simply want to see more money in their paycheck and bigger refund checks by April. Here are the ways your wallet could be impacted by the tax cuts in 2019.
Lower Tax Rate
One of the biggest selling points of the tax cuts law was the reorganization of the individual income tax rate chart. The bill lowered overall tax rates for different income brackets across the board. For example, someone making an income between $38,700 and $82,500 used to be taxed at 25 percent. With the new tax law, starting January 1, 2019, this income range will be taxed at a lower rate of 22 percent.
Smaller Tax Refund
While the lowering of the income tax is a welcome change, most Americans won’t see this extra money in their wallet until they file their taxes for 2019. Those who are filing their taxes this year for 2018 will still be paying the 2017 higher tax rates. They will also have to adhere to the law’s new tax filing regulations, which could lower their refund check. Starting next year, their refund may get a little bigger.
Easier Way To Take Deductions
Another good thing that came out of the Trump tax cuts is an easier way to claim deductions when preparing your taxes. Under the old laws, the standard deduction for a single person was $6,350 and for married couples, it was $12,700. Some taxpayers skipped the standard deduction and took the time to itemize. Starting this year, filing your taxes just got easier. The standard deduction has been raised to $12,000 for single people and $24,000 for married people.
More Money Back for Parents
Parents of minor children may also get a little more money in their pocket from the tax law changes. The old tax laws allowed parents to get a credit of $1,000 per child on their tax returns. Now, parents get a credit of $2,000 per child when filing their taxes. This credit increase is helpful to parents struggling with the rising cost of raising children and paying for childcare.
Less Money for Homeowners
Owning a home just got a little more expensive with the new tax laws now in place. Under the old regulations, homeowners could deduct the interest charged on their home’s mortgage and any interest from a home equity loan. Those deductions have now been eliminated, making the cost of home ownership pricier.
The tax bill also got rid of several other common tax deductions that make it more likely your refund check will be smaller or that you will owe the IRS this year. It’s no longer possible to claim losses from theft or disasters on your taxes each year. Alimony, moving expenses, unreimbursed work expenses, tax preparation costs, and parking and transportation for work aren’t allowed to be deducted anymore.
The new tax bill may impact your wallet by giving you a little more cash in the future. Be ready to possibly get a lower refund check back because of the new regulations.