Tax brackets – 2017 vs 2018

A new Republican tax bill was signed into law by President Donald Trump, which is changing the tax brackets for 2018.  For the most part, the new 2018 tax brackets are more favorable than the 2017 tax brackets.

Here are the 2017 vs 2018 tax brackets for comparison.

Tax brackets for single filers
2017
10% $0-$9,325
15% $9,326-$37,950
25% $37,951-$91,900
28% $91,901-$191,650
33% $191,651-$416,700
35% $416,701-$418,400
39.6% $418,401 or more
Standard deduction – $6,350
Personal exemption – $4,050

2018
10% $0-$9,525
12% $9,526-$38,700
22% $38,701-$82,500
24% $82,501-$157,500
32% $157,501-$200,000
35% $200,001-$500,000
37% $500,001 or more
Standard deduction – $12,000
Personal exemption – Eliminated

Tax brackets for married taxpayers filing jointly
2017

10% $0-$18,650
15% $18,651-$75,900
25% $75,901-$153,100
28% $153,101-$233,350
33% $233,351-$416,700
35% $416,701-$470,700
39.6% $470,701 or more
Standard deduction – $12,700
Personal exemption – $8,100

2018
10% $0-$19,050
12% $19,051-$77,400
22% $77,401-$165,000
24% $165,001-$315,000
32% $315,001-$400,000
35% $400,001-$600,000
37% $600,000 or more
Standard deduction – $24,000
Personal expenses – eliminated

My thoughts…
It is important to understand what tax bracket you are in to make sure you are putting enough money aside for your taxes for the end of the year. For example, if your wife and you generate $120,000 combined, in 2018 you will want to put away $26,400 for taxes.  In 2017, you would have had to put away $30,000, which is $3,600 more than 2018.  This extra $3,000 you are saving in 2018 can be used to pay off debt quicker or be invested in other ways.  I would not recommend spending the $3,000 on worthless crap.

Preparation for your taxes a year in advance will plan for the optimal situation when tax season arrives.  Work with your accountant or Google what deductibles make sense for your situation.  You do not want to end up in a meeting with your accountant and figure out you did not take advantage of all the tax deductible opportunities available to you.  You are simply throwing free money out the window.  The good news about the new tax law passed by President Trump is standard deductions increased for 2018 versus 2017.

Some other items you may be concerned with will be child tax credit, earned income tax credit, student loan interest deduction, foreign earned income exclusion, medical savings accounts, home mortgage interest, etc. It is time well invested to visit the IRS website to better understand what deductions you are eligible for.  Dealing with taxes is just part of managing your way through the landscape and building success.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: