Understanding the New Tax Reform - The Tax Bracket Change
The Tax Reform and Jobs Act of 2017 ushered in some changes to the Federal taxation as we have known it. Some of the biggest shifts seem could affect home owners, future home buyers and real estate investors.
Over the next few days we'll take a general look at some of the bill's highlights as they affect the residential real estate market.
Tax Bracket Adjustments
One of the first changes experts say tax payers may feel within the first few months of 2018, is the difference in the tax bracket.
The tax bracket are the rates at which individuals are taxed in the U.S. Currently, there are still 7 tax brackets; however, according to the CPAjournal.com, the individual tax rates have been reduced with the reduction of the brackets from 10% - 39.6% previously, to 10% - 37% in 2018.
The new brackets only apply to income earned in 2018, and the determination of whether you could pay more, less or the same in taxes depends on your income and how your taxes (single, married, head of house hold, etc.) are filed which makes it important to consult an accountant to help determine what course of action is best.
According to CNBC.com, the income with holdings have also been adjusted, so depending on your tax with holding at work, you could see more money in your take home pay.
Again, it's a good idea to speak to your accountant before changing with holdings. Most tax experts agree that the goal is not to get a big refund at the year, because you've given an interest-free loan to the government.
If you find yourself with extra funds this year you could consider saving that money if you are planning to purchase, or making an extra payment to the principle on your mortgage if you already own a home.