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The Common Tax Law Changes You Should Look Out For

Written by prositesfinancialJul 19 • 2 minute read

Tax laws are constantly evolving, and staying up-to-date with the latest changes is crucial for accurate tax planning and compliance. As a taxpayer, understanding the current tax laws and regulations can help you make informed decisions and maximize your tax benefits. In this blog post, we will explore key aspects of tax laws that frequently change from year to year. It’s a good idea to stay updated on these elements of the tax code.

Tax Brackets and Rates

Tax brackets determine the percentage of your income that you owe in federal income tax. Stay updated on the income thresholds for each tax bracket and the corresponding tax rates. This knowledge will help you estimate your tax liability and plan your financial activities accordingly.

Standard Deduction and Itemized Deductions

The standard deduction is an amount subtracted from your taxable income, reducing your overall tax liability. It is important to understand the standard deduction amount for your filing status, as it affects your decision to take the standard deduction or itemize deductions. Familiarize yourself with the changes in itemized deductions, such as the limitations on state and local tax deductions, mortgage interest deductions, and medical expense deductions.

Retirement Contributions and Accounts

Tax laws often offer incentives for retirement savings. Stay informed about the contribution limits for retirement accounts, such as 401(k)s, IRAs, and self-employed retirement plans. Understanding the tax advantages, eligibility criteria, and deadlines associated with these accounts can help you make strategic decisions to maximize your retirement savings and potential tax benefits.

Changes in Tax Credits and Deductions

Tax credits and deductions can significantly reduce your tax liability. Keep yourself updated on any changes to popular tax credits and deductions, such as the Child Tax Credit, Earned Income Tax Credit, and Education Tax Credits. Be aware of the eligibility criteria, income limits, and any modifications that may impact your ability to claim these credits and deductions.

Qualified Business Income Deduction

If you are a small business owner or self-employed, understanding the qualified business income (QBI) deduction is essential. This deduction allows eligible businesses to deduct a percentage of their qualified business income, reducing their taxable income. Stay informed about the eligibility requirements, limitations, and calculations involved in claiming the QBI deduction.

Reach Out to Qualified Tax Professionals

Navigating the new tax laws requires staying updated on changes to tax brackets, deductions, credits, and retirement savings options. By understanding the current tax laws for the tax year, you can make informed decisions about your financial activities, maximize tax benefits, and ensure compliance. However, tax laws can be complex, and it’s always advisable to consult with a qualified tax professional or accountant to address specific tax concerns and receive personalized guidance.

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