As people in Tennessee are probably aware, over the last few months both the House of Representatives and the Senate have been working on a new tax bill to overhaul the current tax system. After meeting together, the House and Senate both settled on a joint bill which was passed by both the House and Senate. President Trump recently signed that bill into law and made the tax law changes official. There are some big changes that have been made in the new tax bill.
One change is that there are much fewer itemized deductions that people can take. However, the standard deduction was almost doubled. The tax rates and brackets were also changed. The top brackets had the percentage they are required to pay reduced, and there are other brackets that will see their tax burden reduced as well. However, some people will be put into higher brackets, as some of the brackets lowered the income thresholds for those higher brackets. Many pass-through business will also see the percentage they must pay reduced. The new bill also caps the amount that one can deduct for state and local taxes at $10,000.
Now that the new tax bill is officially law, people will need to learn what brackets they are now in and figure out how much they will need to pay. The law goes into effect on January 1, 2018, so people also do not have much time to figure it out. However, that does not mean that each individual taxpayer is not responsible for knowing the law and paying the correct amount of taxes.
Many people in Tennessee will experience changes in their taxes with the new tax bill. Yet, how it will affect their taxes is still to be determined. It is important that people understand the new law so that they pay the correct amount and avoid any penalties for not paying what they owe. It will take some time to understand all the new implications from the law, but experienced attorneys may be a useful resource if people have a misunderstanding about any aspect of tax law.
Source: Investor’s Business Daily “6 big rules changes for individuals in the new tax bill,” Paul Katzeff, Dec. 22, 2017