If you are a wage earner, by now you may have noticed a decrease in your Federal withholding and a corresponding increase in your net paycheck. This change is the result of newly published withholding charts that reflect reforms to the tax tables for years 2018-2025. Last week, I discussed major changes to credits and deductions that will affect the taxable income of individual taxpayers. The next step in the process of projecting your 2018 tax liability is to apply the new tax tables to your projected taxable income.
Below is a side-by-side comparison that serves as a simple example of the effects of the TCJA.
You will notice that this comparison includes income from a small number of sources. This is for simplicity of demonstration. One major source of income that is missing is business income. I specifically excluded this from the above example so that next week I can dedicate the majority of my post to the effects on business income and more specifically, the section 199A qualified business income (QBI) deduction. Until then, happy calculating and may the TCJA be ever in your favor.
For more information, email FinancialServices@yankeefarmcredit.com or call 1-800-370-3276.