The Tax Cuts and Jobs Act, or TCJA, impacts taxpayers of all kinds. It’s important to be prepared for the changes that come with this law come tax season so that you can better prepare for your financial future.
A massive tax overhaul
The TCJA was signed into law by former President Donald Trump on Dec. 22, 2017. A tax bill that was massive in scope, its purpose was to cut tax rates on the estate, corporate and individual levels.
While the TCJA includes significant changes to the tax laws, the elements that are most likely to affect you depend on your individual circumstances. These include the number of children or dependents you have and whether you’re a homeowner.
Important changes to note
If you own a home and the property tax rate in your locality is high, the TCJA’s new limit on local and state tax deductions is likely to impact your household. The newly introduced cap of $10,000 on deductions includes the total of income, sales, and property taxes. One exemption to the tax law includes taxes that have been either accrued or paid in the course of a person’s trade or business. If you run a small business, you’ll want to note whether this provision of the TCJA applies to you.
The most important thing to bear in mind is that this law will have a significant impact on everyone paying taxes through 2025. The vast majority of Americans should expect to see changes impact their lives in one way or another. Understanding how the law applies to you will help to eliminate confusion when it comes time to file your taxes.
