Individual Tax Rates, Standard Deductions and Personal Exemptions--Sandra Orcutt, EA, Supervisor
Tax brackets remained at seven brackets; however, the tax percent decreased from the highest rate of 39.6% to 37%. The biggest change was the tax bracket for people making $200k to $418k for single filers. In 2017, they were taxed at 33%; however, in 2018, they will be taxed at 35%. This is the tax rates for the married filing joint filers. Again, the tax percent decreased from the highest rate of 39.6% to 37%.
Another big change was the increase in the standard deduction from 2017 to 2018. The standard deduction amounts decrease your Adjusted Gross Income to determine how much tax you will owe. The standard deduction almost doubled to $12,000 for individuals and $24,000 for married couples filing jointly. This means that you must have itemized deductions over this limit to be able to itemize your tax return. We will cover itemized deductions in another video.
Another big loss for the taxpayer is the disappearance of the personal exemptions for 2018. This is the dollar amount that each individual taxpayer was able to deduct for themselves plus each dependent each year. The amount of the individual personal exemption was $4,050 in 2017. This amount was deducted from your Adjusted Gross Income to determine how much tax you owe.
These are just a few changes from the Tax Cuts and Jobs Act that may impact you personally in 2018. If you have any questions or need any additional tax planning click my link above or give us a call at 330-453-7633.