How the New Tax Code Will Affect SCV Residents and Small Businesses

 The newly passed Tax Cuts and Jobs Act of 2017 has left many unsure what affect it will have on their taxes in 2018 and beyond. The good news is most of us will enjoy a reduction in taxes for several years. The new tax code, however, is complex. Thus, many tax professionals are recommending tax planning. We concur this is essential to understanding how to take advantage of the new tax brackets.
Key Tax Changes
Among the most significant changes include the following: Individual tax rates: Most people will see a small reduction in their tax rate. The lowest bracket remains at ten percent, while the other three lower brackets respectively drop by three, three and four percent.
Standard deduction: The standard deduction increases dramatically from $6,500 to $13,000 for individuals, and from $12,000 to $24,000 for families. For many, this will be their largest tax cut and will offset the reduction of the California state tax deduction.
Child tax credit: The new credit doubles from $1,000 to $2,000 per child.
State and local tax deductions: This deduction is limited to $10,000 for state and local property, income or sales taxes. As a result, some taxpayers who previously benefited from itemizing will pay higher taxes.
Mortgage interest deductions: The cap will be reduced from $1,000,000 to $750,000 for new buyers. The bill also suspends the deduction for interest on home-equity loans through 2025.
Medical expenses: The new deduction will kick in at 7.5 percent rather than 10 percent.
The largest beneficiaries of the new tax bill are corporations. Their tax rate was reduced from 35 to 21 percent.
The tax bill also eliminates the Obamacare mandate of a penalty for forgoing health insurance. However, this change does not take affect until 2019.
To ensure you make the most beneficial decisions for your situation, we urge you to receive tax planning guidance from a tax professional. For our clients, we provide free unlimited tax planning advice through our EZ2 Thrive program.
Professional Tax & Financial Services is located at 25124 Springfield Ct., Suite 260, in Valencia. For more information on taxes or how to receive unlimited tax planning advice, please call 661-259-1967 or 1-800-998-4829. You may also visit us at www.scvprotaxservices.com.