Tax Cut and Jobs Act - What you need to know about the new tax laws.*

We are beginning the New Year with a new tax law. This page will detail many of the changes that are important. Let’s start with individual tax rates.

In order to show the effects of the bracket and rate changes there are comparative examples of tax liability based on specified levels of taxable income (very interesting). Keep in mind that taxable income at the most basic level is gross income less the standard deduction. The standard deduction for 2018 is $12,000 for singles, $18,000 for heads of household and $24,000 for married filing jointly versus $6,350, $9,350, and $12,700 for 2017, respectively.

Examples - Comparison of Tax Liability

Single Taxpayer

Taxable Income2018 Tax2017 TaxDollar Reduction
$9,525$953$963$10
$38,700$4,454$5,414$960
$82,500$14,090$16,364$2,274
$157,500$32,090$37,082$4,992
$200,000$45,690$49,400$3,710
$500,000$150,690$153,819$3,129
$500,000+$150,690 + 37% of excess

Married taxpayers filing joint returns and surviving spouses

Taxable Income2018 Tax2017 TaxDollar Reduction
$19,050$1,905$1,925$10
$77,400 $8,907$10,828$1,921
$165,000$28,179$33,085$4,906
$315,000$64,179$79,168$14,989
$400,000$91,379$107,217$15,838
$600,000$161,379$182,831$21,452
$600,000+$161,379 + 37% of excess

Below you will find a comparison of the tax rate schedule for single taxpayers plus the tax rate schedule for married taxpayers filing jointly and surviving spouses. The new tax rates are under the 2018 heading and the old are under the 2017 heading.

Tax Rate Comparison

Single Taxpayers

2018

Taxable Income OverBut Not OverIs Taxed at
$0$9,52510%
$9,525$38,70012%
$38,700$82,50022%
$82,500$157,50024%
$157,500$200,00032%
$200,000$500,00035%
$500,00037%

2017

Taxable Income OverBut Not OverIs Taxed at
$0$9,32510%
$9,325$37,95015%
$37,950$91,90025%
$91,900$191,65028%
$191,650$416,70033%
$416,700$418,40035%
$418,40039.6%

Married Taxpayers Filing Joint Returns & Surviving Spouses

2018

Taxable Income OverBut Not OverIs Taxed at
$0$19,05010%
$19,050$77,40012%
$77,400$165,00022%
$165,000$315,00024%
$315,000$400,00032%
$400,000$600,00035%
$600,00037%

2017

Taxable Income OverBut Not OverIs Taxed at
$0$18,65010%
$18,650$75,90015%
$75,900$153,10025%
$153,100$233,35028%
$233,350$416,70033%
$416,700$470,70035%
$470,70039.6%
*This explanation is general in nature and should not be used for specific planning.  Consult a tax professional for your specific planning needs.

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