Welcome, tax-savvy readers! 🤓 In this post, we’re going to dive into the new tax laws and what they mean for you. Taxes can be confusing and overwhelming, but don’t worry - we’re here to break it down for you. Let’s get started! 💪

Standard Deduction Increase

One of the most significant changes to the new tax law is the increase in the standard deduction. For individuals, the standard deduction is now $12,400, and for married couples filing jointly, it’s $24,800. This means that if your total deductions do not exceed this amount, it may be beneficial to take the standard deduction instead of itemizing your deductions.

🔍 A magnifying glass hovering over a piece of paper with dollar signs on it

Changes to Itemized Deductions

The new tax law has made changes to several itemized deductions. For instance, state and local tax deductions are now capped at $10,000. This means your deductions for income, property, and sales taxes cannot add up to more than $10,000. Additionally, miscellaneous deductions, such as tax preparation fees and unreimbursed employee expenses, have been eliminated.

On the other hand, medical expenses that exceed 7.5% of your adjusted gross income can now be deducted. The threshold for medical expenses deduction was previously 10%. If you plan on deducting medical expenses, now is a great time to make those doctor appointments and invest in medical devices.

đź“Ś A pushpin through a piece of paper with itemized deductions written on it

Changes to the Child Tax Credit

The Child Tax Credit has been expanded in the new tax law. Previously a credit of $1,000 for each child under 17, the credit is now $2,000 per qualifying child. The income limit for the credit has also increased, and it can now be claimed by those making up to $400,000 for married filing jointly or $200,000 if you’re single.

In addition, the new law introduced a $500 credit for non-child dependents who meet certain criteria. This credit is meant to benefit taxpayers with older children, and other qualifying family members who are not children.

👶 A baby bottle with dollar signs pouring out of it

Changes to Business Taxation

The new tax law has brought some significant changes to business taxation. One of the most notable changes is the decrease in the corporate tax rate from 35% to 21%. Additionally, business owners who report their business’s income on their personal taxes may be eligible for a 20% deduction on their business income.

👔 A suit holding a briefcase with the word “business” in it

Conclusion

Overall, the new tax laws bring about significant changes that can positively (and negatively) affect individuals and businesses. Understanding the new tax laws can be challenging, but we hope this post has helped clarify some of the changes.

As always, it’s essential to work closely with a tax professional to ensure you’re getting the most out of your tax deductions. 🤝

đź’ˇTip: keep your receipts and other documentation well organized to make tax season a breeze.

đź’° A piggy bank with a smiley face and sunglasses sitting on top of a pile of money