22 Dec The New 2018 Tax Bracket Broken Down for You.
New Income Tax Brackets Have Been Published
The 2018 income tax brackets have been published so you now have an opportunity to see how you will personally benefit or be impacted by the various changes. I recommend reviewing them yourself to see what’s up! In essence the rates have been lowered and the bracket scope has expanded in term of income levels. Meaning you may remain in a lower bracket longer even if you have increased income. This should provide modest to significant benefits depending on marital status, and filing elections. If you generate your income as a business, such as proprietorships, LLC or SCorp, as most small businesses and some larger businesses do, you should see and additional benefit since up to 20% of your income could be sheltered from the tax man. This is referred to as “passthrough” income. Additionally, the standard deduction has been doubled for both single and married filers so the need to itemize may go away for some people. These significant benefits need to be weighed against some of the not so great aspects of the new law.
One of these other aspects is the cap on real estate property tax deductions. You will only be able to deduct up to $10,000. So if you live in a “high real estate tax” state, or own a second home, you could see some changes there. Also, State and Local income taxes are no longer a deduction so if you happen to live in a state with state and local income taxes, you will no longer be able to apply them to your federal return. Not all states have “high” real estate taxes or state and local income taxes…but some clearly do. You will have to crunch the numbers to see how this plays out against the benefits discussed. The other aspect of the new law is that mortgage interest rate deductions have been capped on loans over $750,000 – meaning interest on loans above $750,000 are no longer deductible. This was really a nominal change from the previous $1,000,000 cap… but will certainly effect people who have very expensive homes.
Married Filing Jointly
For married couples filing jointly, here’s how the proposed rates work out under the GOP tax bill:
| New Rate | New Income Bracket | | | Old Rate | Old Income Bracket |
| 10% | Up to $19,050 | | | 10% | Up to $19,050 |
| 12% | $19,050-$77,400 | | | 15% | $19,050-$77,400 |
| 22% | $77,400-$165,000 | | | 25% | $77,400-$156,150 |
| 24% | $165,000-$315,000 | | | 28% | $156,150-$237,950 |
| 32% | $315,000-$400,000 | | | 33% | $237,950-$424,950 |
| 35% | $400,000-$600,000 | | | 35% | $424,950-$480,050 |
| 37% | $600,000+ | | | 39.6% | $480,050+ |
For other filing brackets, click Here .
There were many other changes to the tax structure which your accountant can review with you, but these are the ones that might effect the most people directly. There are corner cases where almost none of the negatives apply and all of the benefits – e.g a business owner in NH (no state income tax, moderate real estate taxes), living in a $400,000 home, filing as married, with an income of $250,000 should see a lot of benefit. Conversely, someone in California who owns two homes, one at $1,800,000 and a second home at $1,000,000, working for a corporation and making $800,000 per year salary might be challenged to come out ahead. There are many, many examples of people in between these corner cases….. and every situation is different depending on where you live and how you generate your income.
There is not a lot of simplification in the new tax law, so you will continue to need the expert advice of your accountant to optimize your own financial situation. I am not an accountant but do have great interest in the new tax laws and trying to understand how it will effect my family….my customers and my business as we move into 2018 and beyond. I hope some of this information is useful in determining the best real state strategy as you enter 2018. On the whole, in New Hampshire, if you are married, own one home here, and you make most of your joint income here (versus commuting to MA for employment) you should make out pretty well. If you own a business in NH even better.
My Tag Line…. “Heaven is Living in New Hampshire!” is seemingly withstanding the test of time!
To see the entire tax Bracket broken down for you simply click HERE
If you are considering relocating to new Hampshire or purchasing/selling a home in NH, pleas contact The Adams Home Team
Missy Adams, Realtor
Keller Williams Realty
20 Trafalgar Square Suite 101
Nashua, NH 03063
Telephone: 603-320-6368 or 603-883-8400 x138
Visit Missy for more information on this or other properties.
Email: missyadamsrealestate@comcast.net
Twitter: @missyadamsnh #AdamsHomeTeam
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