Major changes were proposed, and now that the House passed a budget, tax reform is one step closer to becoming reality.
Surprise! Tax rates are proposed to go up, not down, unless you’re at the top rate. The bottom 10% marginal rate will increase to 12% and the top 39.6% marginal rate will decrease to 35%.
To make matters worse, your taxable income will increase if you itemize deductions.
The new standard deduction is $12,000 per taxpayer.
If your mortgage interest and charitable contributions are less than the standard deduction then you will just take the standard deduction.
You can no longer claim dependents on your tax return nor can you claim head of household.
Over the age of 65?
Proposed tax reform will decrease your deductions and you will no longer be able to deduct medical expenses.
Say hello to the new tax "postcard" return. Note the GOP plan is to tax 1/2 less on investment income than wage earners.
This is the first in a series on the tax reform bill pending current review and a vote by Congress no later than November 14. If it passes, it would be the most significant restructuring of the tax code in decades and will have repercussions for Californians.
Matthew Davis, CFP®, APMA®; Eureka Wealth Management is your home for financial advice, investments, and insurance. Have a financial question? Give us a call at (760) 537-0791 or visit eurekawealthmanagement.com, email at firstname.lastname@example.org.
John Dillinger, CPA, CGMA, PFS, MS.tax; At DillingerCPA we are committed to improving the lives of our clients by providing expert tax return preparation and planning, while always keeping in mind our client’s dreams and goals. Visit dillingercpa.com to schedule a phone call or email email@example.com.
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Contact your representative: https://www.usa.gov/elected-official