Did the Tax Reform Help You?

May 24, 2019

With the Tax Cuts and Jobs Act in full effect, it is having a direct impact on American taxpayers like you. But even with this reform, the tax code can remain confusing. How this tax bill affects you depends on a variety of factors, including your income, filing status, and deductions. Encino tax consultants can help you understand how the new tax law can help you.

Tax Brackets

How you benefit from the new tax plan largely depends on what tax bracket you fall under. But the changes benefit taxpayers in many ways. Let’s look at an example comparing tax rates from 2017 to 2018. In 2017, a single person with an income of $100,000 was responsible for paying $20,981.35 in taxes. But for 2018 rates, this person would only pay $18,289.50.

And if you’re among the highest earners ($500,001+ for single filers, $600,001+ for married filing jointly), your tax rate is reduced from 39.6% to 37%. You can see that the tax reform tends to benefit taxpayers across the board, no matter the income.

Increase in Standard Deduction

The standard deduction has nearly doubled. This reduction is automatic. If you’re filing as a single individual or married filing separately, your deduction is increased from $6,350 to $12,000. The deduction for married filing jointly is now $24,000, up from $12,700. This results in most taxpayers receiving more money. But Encino tax advisers can assist you in determining whether it’s worth it to take the standard deduction or itemize your deductions.

Lower Corporate Tax Rate

If you’re a business owner who is subjected to corporate taxes, the tax bill comes with a great advantage. The corporate rate has reduced dramatically from 35% to only 21%.

Each taxpayer’s situation is different. Los Angeles tax preparation services will help you figure out exactly how to get the most out of the new tax reforms.