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On December 20, 2017, Congress passed the biggest tax reform law in 30 years — one that will make fundamental changes in the way you, your family, and your business calculate your federal income tax bill and the amount of federal tax you will pay. Here are the biggest changes that will affect individuals and businesses.
There will be seven individual income tax brackets under tax reform. The top individual income tax rate for ordinary income will be 37%.
|IF TAXABLE INCOME IS||THE TAX IS|
|Not over $19,050||10% of taxable income|
|Over $19,050 but not over $77,400||$1,905, plus 12% of the excess over $19,050|
|Over $77,400 but not over $165,000||$8,907, plus 22% of the excess over $77,400|
|Over $165,000 but not over $315,000||$28,179, plus 24% of the excess over $165,000|
|Over $315,000 but not over $400,000||$64,179, plus 32% of the excess over $315,000|
|Over $400,000 but not over $600,000||$91,379, plus 35% of the excess over $400,000|
|Over $600,000||$161,379, plus 37% of the excess over $600,000|
Beginning next year, the Tax Cuts and Jobs Act suspends or reduces many popular tax deductions in exchange for a larger standard deduction:
There are several things that will not be changing under the new tax reform:
With such sweeping tax reform, taxpayers should think carefully about the best way to fully understand and prepare for what is to come. A financial advisor can help educate your choices and help you plan accordingly in the best interests of your family, business and future.