For Americans rushing to fill out their Form 1040 tax forms before tonight’s deadline, here’s one bit of good news: Next year, it could be simpler and your taxes less.
The changes to tax law approved by Republicans in Congress and signed by President Trump last year will alter tax brackets, exemptions and deductions, which could speed the process for an individual or a family that doesn’t have a special circumstance. Those changes didn’t take effect until this year, so they’ll show up on next year’s forms.
Here’s a look at some of the changes that could affect them a year from now:
The United States income tax is a progressive tax, which means the rate goes up as taxable income goes up. The bottom bracket remains at 10 percent, but the income limits go up slightly, from the current $9,325 for an individual or a married person filing separately, and $18,650 for a couple filing jointly. They go to $9,525 and $19,050, respectively. There are still six more brackets, although in most cases, the tax rates came down slightly and income levels are different.
The second bracket was 15 percent for individuals up to $37,950 and couples up to $75,900; it’s now a 12 percent bracket for individuals filing up to $38,700 and couples up to $77,400.
The third bracket was 25 percent for individuals up to $91,900 for couples up to $153,100; now 22 percent for individuals up $82,500 and couples up to $165,000.
The fourth bracket was 28 percent for individuals up to $191,650 and couples up to $233,350; now 24 percent at for individuals up to $157,500 and couples up to $315,000.
The fifth bracket was 33 percent for individuals and couples up to $416,700; now 32 percent for individuals up to $200,000 and couples up to $400,000
The sixth bracket was 35 percent for individuals up to $418,400 and couples up to $470,70; now 35 percent for individuals up to $500,000 and couples up to $600,000
The top bracket was 39.6 percent for individuals above $418,400 and couples above $470,700; now 37 percent for individuals above $500,000 and couples above $600,000. But if you’re in that bracket, someone else is probably doing your taxes and you may not be keeping track of details.
Deductions and credits
The standard deduction, which many people take rather than itemizing, is currently $6,350 for an individual and $12,700 for a couple filing jointly. That will go up to $12,000 for an individual, $18,000 for the head of a household and $24,000 for a couple. Individual taxpayers and couples will be able to add $1,300 per person if they are 65 or older; the head of a household can add $1,600.
People with certain expenses itemize them if they add up to more than the standard deduction. With the increase in the standard deduction, that will be less common, and the new law also has limits on those acceptable deductions. Total state and local sales, income and property property tax deductions are capped at $10,000. Mortgage interest is still deductible, and the cap of $1 million was kept for existing homeowners but lowered to $750,000 for new homeowners.
Taxpayers won’t be able to claim moving expenses or tax preparation costs on next year’s forms, but they will be able to claim charitable donations, child and dependent care credits, and medical and long-term-care expenses that hit at least 7.5 percent of their income (that goes up to 10 percent in 2020.)
The Child Tax Credit is doubled to $2,000 per child and a $500 deduction for non-child dependents. But there are some income and deductibility restrictions that starts to phase it out above $200,000 for an individual and $400,000 for a couple.
The Earned Income Tax credit is unchanged, as are the deductibility levels for 401(k) retirement plans.
The personal personal exemption of $4,050 per person is being eliminated until 2025.
The estate tax exemption is doubled, to $11 million.
Alternative Minimum Tax
The corporate AMT was eliminated, but the individual AMT remains with higher thresholds for individuals and couples.
April 15 is traditionally Tax Day in the United States, unless it falls on a weekend. This year it’s on April 17 because April 16 is the Emancipation Day holiday in the District of Columbia. In 2019, April 15 falls on a Monday and tax forms will have to be in the mail by midnight.