Federal taxes can be confounding in any typical year. But the Republican-led Congress’ mad dash to approve the most sweeping tax overhaul in three decades has left many households unsure of what changes might await them come Jan. 1 and what they should do – if anything – before or after then.
Here are some things to know.
RATE CHANGE
For individuals, the legislation generally lowers rates across income levels. It retains the number of tax brackets – seven – but changes the rates that apply to particular income levels. For a couple filing jointly, the brackets will be 10 percent for taxable income up to $19,050, 12 percent on $19,050 up to $77,400, 22 percent on income to $165,000, 24 percent up to $315,000, 32 percent to $400,000, 35 percent to $600,000 and 37 percent on income above $600,000.
These rates don’t include the effects of deductions, which could change someone’s marginal tax rate. The marginal rate is the highest rate that applies to a taxpayer’s income. But under the bill, the individual tax rate cuts aren’t permanent; they’re set to expire in 2026.