In December of 2017, Congress passed the TAX CUTS AND JOBS ACT, which was subsequently signed into law by President Donald Trump. What most people want to know though is how does this affect me and my life? Here’s a simple breakdown of what this new law looks like overall.
The TAX CUTS AND JOBS ACT will maintain the same seven-bracket structure that was in force previously. However, Congress has tweaked the rates and the income levels at which they apply.
Prior to the new law, the seven tax brackets were 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.
Now, the tax code pegs the new rates at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.
By comparison, the way the seven tax brackets worked before versus now are as follows:
| 2017 | 2018 |
| 10%—$0 to $18,650 | 10%—$0 to $19,500 |
| 15%—$18,651 to $75,900 | 12%—$19,501 to $77,400 |
| 25%—$75,901 to $153,100 | 22%—$77,401 to $165,000 |
| 28%—$153,101 to $233,350 | 24%—$165,001 to $315,000 |
| 33%—$233,351 to $416,700 | 32%—$315,001 to $400,000 |
| 35%—$416,701 to $470,700 | 35%—$400,001 to $600,000 |
| 39.6%—$470,701 or more | 37%—$600,001 or more |
| Standard Deduction = $12,700 | Standard Deduction = $24,000 |
| Personal Deduction = $8,100 | Personal Deduction = Eliminated |
Overall, this will be good news for most of us as about 70% of Americans claim the standard deduction when filing their taxes. Ultimately, our paychecks will almost certainly increase — albeit slightly. And who doesn’t like to see an increase in their salaries and paychecks?
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