How The Tax Cuts and Jobs Act of 2017 Could Affect You
December 22, 2017, witnessed the signing of one of the most sweeping tax legislation since the Tax Reform Act of 1986. According to the new Tax Cuts and Jobs Act of 2017 (TCJA), there are now small reductions to income tax rates for most individual tax brackets and a significant reduction in income tax rates for corporations.
Apart from that, there is now a large new tax deduction for owners of pass-through entities, a substantial increase in individual alternative minimum tax (AMT) as well as estate tax exemptions. The new Tax Cuts and Jobs Act of 2017 has also made major changes to the taxation of foreign income.
However, it’s not all good news for taxpayers, as the TCJA has either eliminated or limited many tax breaks and much of the tax relief will only be temporary. One aspect of the new TCJA that will hit taxpayers hard is the itemized deductions section.
Going forward, when you file your tax return, you can continue to claim either the standard deduction or you can itemize deductions, but the TCJA now limits or suspends many itemized deductions. While itemizing used to help you save tax only if your total itemized deductions exceed your standard deduction, under the new TCJA, itemizing may no longer offer the same benefits.
As per the new Act, the standard deduction for 2018 has been almost doubled, and there is a reduction of itemized deduction benefits overall. Simply put, under the TCJA, you may see less of a tax liability if you usually claim the standard deduction and if you itemize you may have an increased tax liability.
Along with itemized deductions, people are now also limited to only itemize up to $10,000 for their state, local and property taxes between 2018 and 2025.
As a leading accounting firm in Lindon, Utah, our aim at Holyoak & Company is to help you find your way through accounting and taxes most legitimately and profitably. To help you do so, we suggest that if you took the standard deduction before, you will still be able to take advantage of the higher limit now. However, if you still need to itemize, we are confident that we will be able to help you take advantage of all available deductions.