Many people have asked us what the Tax Cuts and Jobs Act of 2017 (TCJA) will do to them or for them in this new year. News reports are suggesting that most of us will see changes to our paychecks starting in February. The IRS is working on a calculator to determine withholding under the new tables. We believe that withholding adjustments are going to be necessary for many people in order to avoid surprises when you file your tax return for 2018.
You can gain a high level look at the differences in the old law and the new by comparing two FREE charts that we have obtained for you. The first is an annual Key Financial Data for 2018 and the other is the older version with 2017 data. To make the comparison easier, we have a prepared a way for you to get these two charts in one PDF.
Note that the tax rate schedules apply to “taxable income” that is the amount after adjustments, deductions, and exemptions. But be aware that exemptions go away and are replaced by a higher standard deduction for 2018. Taxable income was the amount on line 43 of form 1040 of prior years.
For a deeper dive into the impact of the new law, I recommend a detailed tax projection into 2018 and 2019 using the data from your 2016 or 2017 tax return and updated for expected changes to income and deductions.