There's a lot of speculation out there about how President Donald Trump's new tax plan, signed into law in 2017, will affect people's tax returns this year. Millions of us might watch our tax refunds shrink or disappear completely. Some of us, apparently, will be buying a private jet.
Of course, how the law might affect your return specifically will depend on dozens of distinct factors, and you might see big changes or no changes at all. But here are a few tax law changes to keep an eye out for.
The first thing that affects your tax return is the rate of federal taxes that you're paying on your income. (After that, state income taxes, deductions, and other factors come into play.) While Trump's law keeps the same seven tax brackets as before, the rates and income levels at which they apply have been shifted a little. Single filers making less than $9,525 will pay 10 percent in federal income tax, and the brackets go up like this:
For married couples filing jointly, anything under $19,050 will be taxed at 10 percent, and then:
The biggest impact might be felt on middle income earners in the second- and third-lowest brackets who may see a higher rate than last year. Also, the federal tax rate for the highest earners dropped to 37 percent from 39.6 last year.
There are also significant changes to the tax deductions you can claim this year. Deductions for interest on home equity loans, state and local taxes, dependent and personal expenses, and job-related moving expenses are all gone, along with a few others. Perhaps the biggest change applies to alimony payments, which were previously tax deductible for the payer, and taxed as income for the payee. But that's different now: no deduction for the payer, but not taxed as income for the payee.
To figure out whether your tax return will be bigger this year before you file, you might want to talk to a local tax attorney about your income and possible deductions.