2018 tax reform for individual taxpayers: Points to remember
Ready for the new tax season?
Sorry for spoiling your mood. But the process of filing your taxes will be a lot less painful if you get well acquainted with the 2018 Tax Reform.
According to the 2018 tax plan, individual tax cuts will remain valid only until 2025 (while business tax cuts are going to be made permanent). However, the reform may be beneficial for families with higher than average incomes – since the GOP has decided to change tax brackets and cut tax rates.
Let’s remind ourselves what happened during the 2018 Tax Reform and how it affects individual taxpayers.
How the GOP tax bill affects single taxpayers
Previously, the tax rates have been 10%, 15%, 25%, 28%, 33%, 35%, 39.6% for each of the seven tax brackets (both for single and joint filers). Starting in 2018, single taxpayers have to pay taxes according to the new tax brackets and rates.
Taxpayers filing individually with annual incomes of $9,525 or less, have to pay the same 10% tax and report it on their IRS Form 1040. Individuals earning $500,000 or more are obliged to pay 37% of their income – compared to the 39,6% they used to pay. According to the new tax law, the standard deduction for individual filers has been raised to $12,000, compared to its previous standing of $6,350.
How the GOP tax bill affects taxpayers filing jointly
According to the GOP tax reform, married couples filing their returns jointly will face tax bracket and rate changes. Use IRS Form 1040EZ to file your single or joint return for tax season 2019 and find out what tax bracket you’re in and at what rate you’ll be taxed.
Households with an annual income of $19,050 or less will be taxed at the same 10% rate. Those earning $600,000 or higher are going to be taxed at 37%, compared to the 39,6% they used to pay. The standard deduction for taxpayers filing jointly has been raised to $24,000, up from $12,700 under the previous tax law.
Americans in the lowest income bracket pay the same tax rate they used to pay, while those earning more than $19,050 will annually receive a tax break.
Regardless of what tax bracket you are in, U.S. businesses and individuals still have to report their income to the IRS on time.
Prepare yourself for the new tax season and save your time by filling your necessary tax forms electronically with PDFfiller.