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Will the new tax law actually reduce your tax burden?

The honest answer to that question is it depends.  The Tax Cuts and Jobs Act (TCJA) generally reduced individual tax rates for 2018 through 2025.  The increase of certain tax credits for families will also help many. However, the elimination of certain tax breaks and the reduction of others could actually increase your taxable income. To add further confusion to the mix, something as simple as what your filing status is can either help or hurt you.

Unmarried vs. married taxpayers

Under the prior law, only the two lowest tax brackets were set at twice that of the singles bracket, so the marriage penalty applied to joint filers.  The TCJA made changes to some of the middle tax brackets to further eliminate the marriage penalty.  For the years 2018 thru 2025, married taxpayers won’t be pushed into some middle brackets until much higher income levels.  For example, the beginning of the 32% bracket for joint filers for 2018 is $315,001, whereas it was $233,351 for 2017.  But where there are winners, there are also losers.  The beginning of the 32% bracket for singles for 2018 is $157,501, whereas it was $191,651 for 2017. For heads of households, the beginning of this bracket has decreased even more significantly, to $157,501 for 2018 from $212,501 for 2017.

2018 filing and 2019 planning

Because there are so many variables, it will be hard to tell exactly how your tax return will be affected by TCJA changes, including changes to the brackets, unless you analyze your specific situation.  Will this historic tax bill make you a “winner” or a “loser?”  Contact us for the answer to that question.  We can help you file your 2018 tax return and help you take steps to minimize your tax burden for 2019.


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