How the Tax Bill May Affect You

Taxes are not something we think about often, especially when it’s outside of filing season. However, the tax bill does impact us throughout the year, even though we think about it during one particular season. Therefore, American Investment Planners decided to share important tax bill information with readers.

Income Tax Rates Are Lower

As you may have noticed in this year’s filing, the tax rate tiers were lowered in this tax bill. This means less money was taken from those with higher levels of income. For example, for someone who made $45,000, the tax rate was reduced from 25% to 22%. Although this 3% decrease may not seem like much, it comes out to $1,350 for a taxpayer making $45,000.

Standard Deduction Was Practically Doubled

Some taxpayers choose to itemize their taxes, but a vast majority use the standard deduction rate offered by the federal government. The new tax bill doubled the standard deduction rate, allowing single filer’s deductions to increase from $6,350 to $12,000. This deduction will help millions of Americans save thousands of dollars for the length of the bill.

Divorces Will Be More Expensive

In the past, alimony payments were tax deductible. However, under the new bill, alimony payments will be tax deductible for the recipient rather than the provider. This means the alimony money will be taxed on the higher tax payer’s dime rather than the lower tax payer’s dime. This means that overall, alimony payments will be smaller in size and more alimony money will go to taxes.

As you can see, the tax bill affects all Americans, from the poorest of the poor to the richest of the rich. When it comes to being tax savvy, preparation is critical. At American Investment Planners, we can help you prepare for next year’s tax season by helping you invest wisely now and assist you in filing taxes later. If you are interested in our services, reach out to use for a free quote!