This episode, we're giving you your cheat sheets to LIFE, from ketogenic dieting to bitcoin.
But this might be the most important of the bunch: your guide to the latest tax reform, courtesy of Love Your Life Not Theirs author Rachel Cruze.
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First, yes, corporations received a significant cut in their tax rate — from 35 to 21 percent, in fact. "The hope is that corporations will use this to hire more people and grow the economy," says Rachel. "There is no legislation mandating how companies must use the funds freed by the tax break, but some companies have already given employees bonuses as a result of this bill." (Woot!)
But, while that's great news, we know what you're most concerned about: how your taxes have been affected. And the good news is, for nearly everyone, the tax rates have gone down!
Check it out:
SINGLE FILERS
JOINT FILERS
Looks great, and the reduced tax rates have already gone into effect.
On the other hand, you'll have to wait a little longer for the standard deductions changes. But the good news is, it's nearly doubled for everyone! It's gone from $6,350 to $12,000 for single filers, and $12,700 to $24,000 for joint filers. "So if you’re single and do an itemized deduction, and it equals less than $12,000, you’d take the standard deduction," says Rachel. (Worth considering -- only 27 percent of people did it last year!) Just remember, this won't apply until you file in 2019.
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But! While all the brackets are down, the brackets themselves have shifted slightly. So for some people who are in a new tax bracket, their tax rate has actually gone up.
Take a peek:
SINGLE FILERS
Old Brackets
$0 - $9,525 — 10%
$9,526 - $38,700 — 15%
$38,701 - $93,700 — 25%
$93,701 - $195,450 — 28%
$195,451 - $424,950 — 33%
$424,951 - $426,700 — 35%
$426,701 and up — 39.6%
New Brackets
$0 - $9,525 — 10% (SAME)
$9,526 - $38,700 — 12% (-3%)
$38,701 - $82,500 — 22% (-3%)
$82,501 - $93,700 — 24% (-1%)
$93,701 - $157,500 — 24% (-4%)
$195,451 - $200,000 — 32% (-1%)
$200,001 - $424,950 — 35% (+2%)
$424,951 - $426,700 — 35% (SAME)
$426,701 - $500,000 — 35% (-4.6%)
$500,001 and up — 37% (-2.6%)
JOINT FILERS
Old Brackets
$0 - $19,050 — 10%
$19,051 - $77,400 — 15%
$77,401 - $156,150 — 25%
$156,151 - $237,950 — 28%
$237,951 - $424,950 — 33%
$424,951 - $480,050 — 35%
$480,051 and up — 39.6%
New Brackets
$0 - $19,050 — 10% (SAME)
$19,051 - $77,400 — 12% (-3%)
$77,401 - $156,150 — 22% (-3%)
$156,150 - $165,000 — 22% (-6%)
$165,001 - $237,950 — 24% (-4%)
$237,951 - $315,000 — 24% (-9%)
$315,001 - $400,000 — 32% (-1%)
$400,001 - $424,950 — 35% (+2%)
$424,951 - $480,050 — 35% (SAME)
$480,051 - $600,000 — 35% (-4.6%)
$600,001 and up — 37% (-2.6%)
And remember, these brackets are set to stay in place until 2025, when the rates will go back to the original rates — unless a new bill is passed that changes this.
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