{"id":24123,"date":"2026-04-21T14:12:41","date_gmt":"2026-04-21T14:12:41","guid":{"rendered":"https:\/\/incredipros.com\/?p=24123"},"modified":"2026-04-21T14:12:41","modified_gmt":"2026-04-21T14:12:41","slug":"tax-reform-bill-how-does-it-impact-you","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=24123","title":{"rendered":"Tax Reform Bill: How Does It Impact You"},"content":{"rendered":"
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Just when you started getting comfortable with your annual chore of tax filing, the 2018 tax reform bill hit the scene\u2014and everything changed. From tax rates to deductions, a whole bunch of tax changes forced millions of Americans to rethink how they did their taxes.\u00a0\n <\/p>\n

But here\u2019s the thing: Even though the tax reform bill brought some big changes, it also made a lot of things simpler.\u00a0\n <\/p>\n

Stick with us, and we\u2019ll break down the details so you understand what\u2019s changed and how those changes impact you!\n <\/p>\n

How the Tax Reform Bill Impacted Your Taxes<\/strong><\/h2>\n

Even though the tax reform bill\u2014formally known as the \u201cTax Cuts and Jobs Act\u201d\u2014was introduced way back in 2017, it didn\u2019t go into effect until you filed your 2018 taxes that were due in April 2019.\u00a0Nearly all of the changes made in the bill will expire after 2025, while most of the business provisions will stay in place.\n <\/p>\n

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Get expert money advice to reach your money goals faster!<\/p>\n<\/p><\/div>\n

Almost everyone felt the difference, and you probably even noticed that less money was withheld from your paychecks in 2018 as a result of the changes.\u00a0\n <\/p>\n

Here\u2019s a rundown of all the changes that came with the tax reform bill.\n <\/p>\n

New Income Brackets and Marginal Tax Rates\u00a0<\/strong><\/h2>\n

First, one of the most talked about changes in the 2018 tax reform bill was the update to income tax brackets and marginal tax rates.\n <\/p>\n

So, what are marginal tax rates? Those are the percentages of your income that you pay in taxes. What this means for you: Your income is not taxed at one rate but at several different rates, depending on how much you make.\n <\/p>\n

How do you know your tax rates? Enter tax brackets. Tax brackets are income ranges. It\u2019s that simple.\n <\/p>\n

Each tax bracket corresponds to a tax rate. For example, if your income is $120,000, your tax rate isn\u2019t a flat 24%. Instead, part of your income is taxed at 10%, part at 12%, part at 22% and part at 24%. (You can check out the chart below to see all the tax brackets with their corresponding tax rates.)\n <\/p>\n

Here\u2019s the thing about income brackets and tax rates: It\u2019s fairly common for tax brackets to change to account for inflation each year. But the marginal tax rates only change when a new tax law is passed\u2014which doesn\u2019t happen often. That\u2019s why people were especially interested in this part of the tax reform bill.\n <\/p>\n

The tax reform bill\u00a0lowered<\/em>\u00a0marginal tax rates, which was good news for many Americans because it meant they could pocket more money from their paychecks!\n <\/p>\n

To help you see those changes, take a look at the 2017 and 2018 marginal tax rate tables.\n <\/p>\n

2017 Marginal Income Tax Rates and Brackets<\/strong>\n <\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

2017 Marginal Tax Rates<\/strong>\n <\/p>\n<\/td>\n

\n

Single 2017 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

\n

Married Filing Jointly 2017 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

\n

Head of Household 2017 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

\n

Married Filing Separately 2017 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n<\/tr>\n<\/thead>\n

\n

10%<\/strong>\n <\/p>\n<\/td>\n

\n

$0 – $9,325\n <\/p>\n<\/td>\n

\n

$0 – $18,650\n <\/p>\n<\/td>\n

\n

$0 – $13,350\n <\/p>\n<\/td>\n

\n

$0 – $9,325\n <\/p>\n<\/td>\n<\/tr>\n

\n

15%<\/strong>\n <\/p>\n<\/td>\n

\n

$9,326 – $37,950\n <\/p>\n<\/td>\n

\n

$18,651 – $75,900\n <\/p>\n<\/td>\n

\n

$13,351 – $50,800\n <\/p>\n<\/td>\n

\n

$9,326 – $37,950\n <\/p>\n<\/td>\n<\/tr>\n

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25%<\/strong>\n <\/p>\n<\/td>\n

\n

$37,951 – $91,900\n <\/p>\n<\/td>\n

\n

$75,901 – $153,100\n <\/p>\n<\/td>\n

\n

$50,801 – $131,200\n <\/p>\n<\/td>\n

\n

$37,951 – $76,550\n <\/p>\n<\/td>\n<\/tr>\n

\n

28%<\/strong>\n <\/p>\n<\/td>\n

\n

$91,901 – $191,650\n <\/p>\n<\/td>\n

\n

$153,101 – $233,350\n <\/p>\n<\/td>\n

\n

$131,201 – $212,500\n <\/p>\n<\/td>\n

\n

$76,551 – $116,675\n <\/p>\n<\/td>\n<\/tr>\n

\n

33%<\/strong>\n <\/p>\n<\/td>\n

\n

$191,651 – $416,700\n <\/p>\n<\/td>\n

\n

$233,351 – $416,700\n <\/p>\n<\/td>\n

\n

$212,501 – $416,700\n <\/p>\n<\/td>\n

\n

$116,676 – $208,350\n <\/p>\n<\/td>\n<\/tr>\n

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35%<\/strong>\n <\/p>\n<\/td>\n

\n

$416,701 – $418,400\n <\/p>\n<\/td>\n

\n

$416,701 – $470,700\n <\/p>\n<\/td>\n

\n

$416,701 – $444,550\n <\/p>\n<\/td>\n

\n

$208,351 – $235,350\n <\/p>\n<\/td>\n<\/tr>\n

\n

39.6%<\/strong>\n <\/p>\n<\/td>\n

\n

Over $418,400\n <\/p>\n<\/td>\n

\n

Over $470,700\n <\/p>\n<\/td>\n

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Over $444,550\n <\/p>\n<\/td>\n

\n

Over $235,350\n <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Chart: 2017 Marginal Income Tax Rates and Brackets<\/em>1<\/sup><\/em>\n <\/p>\n

How do all these numbers stack up to the changes made for the 2018 tax year after the tax reform bill went into effect? Let\u2019s compare.\n <\/p>\n

2018 Marginal Income Tax Rates and Brackets<\/strong>\n <\/p>\n\n\n\n\n\n\n\n\n\n\n\n
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2018 Marginal Tax Rates<\/strong>\n <\/p>\n<\/td>\n

\n

Single 2018 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

\n

Married Filing Jointly 2018 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

\n

Head of Household 2018 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n

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Married Filing Separately 2018 Tax Bracket<\/strong>\n <\/p>\n<\/td>\n<\/tr>\n<\/thead>\n

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10%\n <\/p>\n<\/td>\n

\n

$0 – $9,525\n <\/p>\n<\/td>\n

\n

$0 – $19,050\n <\/p>\n<\/td>\n

\n

$0 – $13,600\n <\/p>\n<\/td>\n

\n

$0 – $9,525\n <\/p>\n<\/td>\n<\/tr>\n

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12%\n <\/p>\n<\/td>\n

\n

$9,526 – $38,700\n <\/p>\n<\/td>\n

\n

$19,051 – $77,400\n <\/p>\n<\/td>\n

\n

$13,601 – $51,800\n <\/p>\n<\/td>\n

\n

$9,526 – $38,700\n <\/p>\n<\/td>\n<\/tr>\n

\n

22%\n <\/p>\n<\/td>\n

\n

$38,701 – $82,500\n <\/p>\n<\/td>\n

\n

$77,401 – $165,000\n <\/p>\n<\/td>\n

\n

$51,801 – $82,500\n <\/p>\n<\/td>\n

\n

$38,701 – $82,500\n <\/p>\n<\/td>\n<\/tr>\n

\n

24%\n <\/p>\n<\/td>\n

\n

$82,501 – $157,500\n <\/p>\n<\/td>\n

\n

$165,001 – $315,000\n <\/p>\n<\/td>\n

\n

$82,501 – $157,500\n <\/p>\n<\/td>\n

\n

$82,501 – $157,500\n <\/p>\n<\/td>\n<\/tr>\n

\n

32%\n <\/p>\n<\/td>\n

\n

$157,500 – $200,000\n <\/p>\n<\/td>\n

\n

$315,000 – $400,000\n <\/p>\n<\/td>\n

\n

$157,500 – $200,000\n <\/p>\n<\/td>\n

\n

$157,501 – $200,000\n <\/p>\n<\/td>\n<\/tr>\n

\n

35%\n <\/p>\n<\/td>\n

\n

$200,001 – $500,000\n <\/p>\n<\/td>\n

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$400,001 – $600,000\n <\/p>\n<\/td>\n

\n

$200,001 – $500,000\n <\/p>\n<\/td>\n

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$200,001 – $300,000\n <\/p>\n<\/td>\n<\/tr>\n

\n

37%\n <\/p>\n<\/td>\n

\n

Over $500,000\n <\/p>\n<\/td>\n

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Over $600,000\n <\/p>\n<\/td>\n

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Over $500,000\n <\/p>\n<\/td>\n

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Over $300,000\n <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Chart: 2018 Marginal Income Tax Rates and Brackets<\/em>2<\/sup><\/em>\n <\/p>\n

Here\u2019s a practical example of how these changes played out.\n <\/p>\n

In 2017, a single individual with a taxable income of $100,000 paid $20,981.35 in taxes: ($9,325 x 0.10) + ($28,624 x 0.15) + ($53,949 x 0.25) + ($8,100 x 0.28).\u00a0\n <\/p>\n

Now let\u2019s compare that to the 2018 marginal tax rates. For 2018, a single individual with a taxable income of $100,000 paid\u00a0$18,288.92\u00a0in taxes: ($9,525 x 0.10) + ($29,174 x 0.12) + ($43,799 x 0.22) + ($17,499 x 0.24).\u00a0\n <\/p>\n

That\u2019s a savings of $2,692\u2014nice! And the savings aren\u2019t just for singles. Not only did married folks enjoy a lower tax rate for income earned in 2018, but the shift in tax brackets also removed what used to be an unintentional tax penalty for married filers.\n <\/p>\n

Under the 2017 tax law, some married filers were pushed into a higher income bracket when they combined their income with their spouse\u2019s. Now the new income brackets are simply doubled for joint filers, which means that unintentional marriage penalty is gone.\n <\/p>\n

Difference in the Standard Deduction<\/strong><\/h2>\n

What else changed? Another important difference in the tax reform bill is that\u00a0the standard deduction almost doubled. That\u2019s great news!\u00a0\n <\/p>\n

The standard deduction is\u00a0an automatic reduction in what you owe in taxes. When you pay taxes, you have the option of taking the standard deduction or itemizing your deductions. If you itemize, you calculate your deductions one by one. Itemizing is more of a hassle, but it\u2019s worth it if your itemized deductions exceed the amount of the standard deduction.\n <\/p>\n

Here\u2019s a quick look at how the standard deduction changed from 2017 to 2018:\n <\/p>\n

Changes to the Standard Deduction<\/strong>\n <\/p>\n\n\n\n\n\n\n\n\n
\n

Filing Status<\/strong>\n <\/p>\n<\/td>\n

\n

2017 Standard Deduction<\/strong>\n <\/p>\n<\/td>\n

\n

2018 Standard Deduction<\/strong>\n <\/p>\n<\/td>\n<\/tr>\n<\/thead>\n

\n

Single\n <\/p>\n<\/td>\n

\n

$6,350\n <\/p>\n<\/td>\n

\n

$12,000\n <\/p>\n<\/td>\n<\/tr>\n

\n

Married Filing Jointly\n <\/p>\n<\/td>\n

\n

$12,700\n <\/p>\n<\/td>\n

\n

$24,000\n <\/p>\n<\/td>\n<\/tr>\n

\n

Married Filing Separately\n <\/p>\n<\/td>\n

\n

$6,350\n <\/p>\n<\/td>\n

\n

$12,000\n <\/p>\n<\/td>\n<\/tr>\n

\n

Head of Household\n <\/p>\n<\/td>\n

\n

$9,350\n <\/p>\n<\/td>\n

\n

$18,000\n <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Chart: Changes to the Standard Deduction<\/em>3<\/sup><\/em>\n <\/p>\n

At first glance, the increase in the standard deduction made itemizing look even less worthwhile. But there\u2019s another piece to the puzzle.\u00a0\n <\/p>\n

The 2018 tax reform bill got rid of the personal exemption. That\u2019s the amount a taxpayer used to be able to deduct from their taxable income for themselves and any dependents claimed on their tax return. Here\u2019s how those two changes played out:\n <\/p>\n

In 2017, the personal exemption was $4,050 per dependent (like a child or relative) and per taxfiler.4<\/sup>\u00a0So, back then, a married couple filing jointly with no dependents who made $100,000 received a $12,700 standard deduction and $8,100 in personal exemptions, leaving them with a taxable income of\u00a0$79,200\u00a0($100,000 \u2013 $20,800 = $79,200).\u00a0\n <\/p>\n

In 2018, that same couple received a $24,000 standard deduction and no personal exemptions, leaving them with a taxable income of\u00a0$76,000.\n <\/p>\n

Essentially, the tax reform bill simplified this portion of the income tax process. In many cases, the increase in the standard deduction makes up for the elimination of personal exemptions, leaving some\u00a0Americans with more money in their pockets.\n <\/p>\n

Keep in mind that every situation is different as far as whether you should take the standard deduction or whether you should itemize.\u00a0Talk to a tax pro\u00a0to know what’s best for you.\n <\/p>\n

Difference in Child Tax Credit<\/strong><\/h2>\n

The kids are finally paying off. In 2017, if parents made less than $110,000 jointly or $75,000 individually, they received a $1,000 child tax credit for qualified children under the age of 17.5<\/sup>\u00a0\n <\/p>\n

The\u00a02018 tax reform bill\u00a0increased that credit to $2,000\u00a0per qualified child\u00a0and raised the income limits for the credit to $400,000 jointly and $200,000 individually.6<\/sup>\u00a0This means a lot more people will be able to receive tax credits for Junior. Woo-hoo!\n <\/p>\n

More Changes for Taxpayers With Kids<\/strong><\/h2>\n

If you have children, you may have a\u00a0529 college savings plan\u00a0in place. Money you put in the account grows tax-free, but up until 2018, it could only be used for qualifying college expenses. The tax reform bill changed that.\n <\/p>\n

Now, if you have a 529 savings plan for your child,\u00a0you can use it for education other than college. For example, if you have children in private school or if you pay for tutoring while they\u2019re in kindergarten through twelfth grade, you can use money from your 529 for these expenses tax-free.7<\/sup>\n <\/p>\n

While it may seem like a benefit to use a 529 plan prior to college, you should work with an\u00a0investment professional\u00a0to make sure\u2014especially if you want to use the 529 plan sooner than you originally intended. Withdrawing too much money before Junior goes to college can cancel out the power of compound growth.\n <\/p>\n

Differences for Homeowners<\/strong><\/h2>\n

What about mortgage deductions? In 2017, if you itemized your deductions, the IRS allowed you to deduct the interest you paid on your primary residence and\/or second home, as long as your original mortgage principal wasn\u2019t more than\u00a0$1 million.\u00a0\n <\/p>\n

In 2018, the maximum mortgage principal in the tax reform bill was lowered to\u00a0$750,000. But for taxpayers who had\u00a0existing<\/em>\u00a0mortgages in between $750,000 and $1 million, they were grandfathered into the old deduction.8<\/sup>\n <\/p>\n

Before the tax reform bill, you were also allowed to deduct interest paid on home equity debt, up to $100,000. The tax reform bill removed that deduction starting in 2018.9<\/sup>\u00a0So, yep\u2014borrowing against your house got a whole lot dumber!\u00a0\n <\/p>\n

And another change with the tax reform bill affects homeowners who have recently moved or are looking to move\u2014most people can no longer deduct moving expenses on their taxes. And that makes a huge difference when you’re trying to financially recover from all those moving expenses that pile up!\u00a0\n <\/p>\n

Since the tax reform bill passed, the only people who can still claim moving expenses on their federal taxes are:\n <\/p>\n

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  • Active-duty members of the military who move (either inside the U.S. or to a foreign country) due to a change of station or military order<\/li>\n
  • The spouse or dependent of an active military member who has to move due to a change of station or military order<\/li>\n
  • The spouse or dependent of a military member who has died, been imprisoned, or deserted10<\/sup><\/li>\n<\/ul>\n

    \u00a0\n <\/p>\n

    Difference in the SALT Deduction<\/strong><\/h2>\n

    The SALT deduction is another deduction that was debated before the tax reform bill was voted in. No, we\u2019re not talking about table salt. SALT stands for \u201cstate and local taxes,\u201d and this deduction addresses whether or not you can deduct state income taxes and\/or sales taxes if you decide to itemize your deductions.\u00a0\n <\/p>\n

    In the past, there was no limit on the deduction of state and local taxes, which was an advantage to those living in states with high taxes like California and\u00a0New York.\u00a0The new tax reform bill keeps the SALT deduction but\u00a0limits the total deductible amount to $10,000, including income, sales and property taxes.11<\/sup>\n <\/p>\n

    That means that you may not be able to deduct all of your state and local taxes if you live in a state with high taxes. But if these taxes were under $10,000 for you already, you won\u2019t even notice this change.\n <\/p>\n

    The Estate Tax Exemption<\/strong><\/h2>\n

    What\u2019s the estate tax? Basically, the estate tax is a tax you pay on inherited money and property. Simple enough, right? Before the tax reform bill, there was a 40% tax rate on any inherited property valued over $5.49 million. With the new tax reform bill, in 2018 you could inherit a total of $11.18 million before the estate was hit with the 40% tax.12<\/sup>\u00a0\n <\/p>\n

    More Deductible Income for Charitable Donations<\/strong><\/h2>\n

    Good news for those who like to give like no one else! In 2017, you could deduct up to half of your income in qualified charitable donations if you itemized your deductions.\u00a0The new tax reform bill increased that limit to 60% of your income.13<\/sup>\u00a0\n <\/p>\n

    Increased Medical Expenses Deduction\u2014For a While<\/strong><\/h2>\n

    Another frequently used deduction is the medical expense deduction. Before the new tax reform bill, you could deduct unreimbursed medical expenses above\u00a010%<\/strong>\u00a0of your adjusted gross income (AGI), which is your total income minus other deductions you have already taken. So, if your AGI was $50,000 and you spent more than $5,000 (10% of your AGI) on out-of-pocket medical expenses, you could deduct the total amount beyond $5,000.\n <\/p>\n

    The new tax reform bill temporarily reduced that hurdle to\u00a07.5%<\/strong>\u00a0of your AGI. Congress kept extending it on a temporary basis every year until they made the 7.5% threshold permanent beginning in 2021.14\u00a0<\/sup>\n <\/p>\n

    No More Health Care Penalty<\/strong><\/h2>\n

    The tax reform bill didn\u2019t repeal the Affordable Care Act, otherwise known as Obamacare, but it\u00a0did<\/em>\u00a0get rid of the penalty you owe if you don\u2019t get health insurance starting with the 2019 tax year.15<\/sup>\u00a0\n <\/p>\n

    While getting rid of penalties is good news, don\u2019t use that as an excuse not to\u00a0get health insurance. We know\u2014insurance is expensive. But not having it can cost you way more!\u00a0\n <\/p>\n

    Other Tax Deductions That Disappeared<\/strong><\/h2>\n

    There were a few other deductions that didn\u2019t make it past the chopping block in the new tax reform bill, like:\n <\/p>\n

      \n
    • Casualty and theft losses (except those attributable to a federally declared disaster)<\/li>\n
    • Unreimbursed employee expenses<\/li>\n
    • Tax preparation expenses<\/li>\n
    • Alimony payments<\/li>\n
    • Moving expenses<\/li>\n
    • Employer-subsidized parking and transportation reimbursement<\/li>\n<\/ul>\n

      And if you were used to writing off miscellaneous work expenses, like travel or meals with clients, those tax breaks also disappeared as part of the tax reform bill. That may seem like bad news, but there are plenty of other ways to save money on your small-business taxes.\u00a0\n <\/p>\n

      If you have a small business or a side hustle, a\u00a0tax pro\u00a0can help you take advantage of all the deductions you qualify for.\u00a0\n <\/p>\n

      What Does Dave Have to Say About the New Tax Reform Bill?<\/strong><\/h2>\n
      \n