If you watch the news, you know that Congress passed a major tax reform bill several months ago that could alter your situation for the 2018 tax year. The Tax Cuts and Jobs Act is over 500 pages and 72,000 plus words long. In this blog, we will work to break down two significant changes.
The personal exemption has been eliminated under the new tax bill. In 2017, the personal exemption was $4,050 per person. That means a family of four would deduct $16,200 from their taxable income, lowering the family’s overall tax burden. This loss of personal exemptions can be discouraging for lower- and middle-income Americans, especially because they used to be able to combine their personal exemptions with their standard deduction. High-income families are not as impacted, because the value of the personal exemption for their families decreased as they reached higher joint income levels.