I know it’s a little soon to be talking about filing your 2017 tax return (though, it’s never actually too early!), but a bit of news happened this week that could drastically change the amount of taxes you’ll pay next year.  Donald Trump recently released his plan to cut taxes for the upcoming filing year, and if his plan becomes legislation, it means a full overhaul of the current tax code.

It’s important to note that the below table is not official and the information within it is only conjecture at this point because no law has been passed. It’s likely to take a bit of negotiating to get something done, so the final result may look different.  But it’s still fun to look at now, and see what’s potentially around the corner.

2018 Federal Income Tax Brackets (Single)

If Taxable Income Is ...	The Tax Is ...
$0 - $37,950	10% of the taxable income
$37,950 - $191,650	$3,795 + 25% of the taxable income over $37,950
$191,650 +	$42,220 + 35% of the taxable income over $191,650

2018 Federal Income Tax Brackets (Married)

If Taxable Income Is ...	The Tax Is ...
$0 - $75,900	10% of the taxable income
$75,900 - $233,350	$7,590 + 25% of the taxable income over $75,900
$233,350 +	$46,952.50 + 35% of the taxable income over $233,350

If you’re wondering where the rest of the table is… well, that’s it.  Three tax brackets and tax rates of 10%, 25% and 35%.  Gone is the seven bracket system, and here you see a much more simplified setup, with the top rate being 4.6% lower than in previous years (39.6% was the top rate in 2017).

New 2017 Standard Deduction

Another big benefit from the newly introduced Trump tax code is the increase of the standard deduction.  Your proposed 2017 standard deduction amounts are as follows:

• Married filing jointly and surviving spouses: $24,000 (previously $12,700)
• Single, or married filing separately: $12,000 (previously $6,350)

But with all of these tax decreases, there is one glaring negative.  The administration is looking to kill off all but two tax deductions that can be claimed on your tax return: the home mortgage interest deduction and charitable donations.  Say goodbye to claiming a home office, travel expenses for a new job, state income tax, etc.  Part of the hurt from this change will be relieved by the higher standard deduction amount, but for filers who love to add line after line of deduction? Well, those days may be over.

Related: The “Old” 2017 Standard Deduction and Exemption Limits

Please remember that these rates are for the income you receive in 2017, and the tax return you will be filing in early 2018.  Of course, nothing is official until the IRS confirms what the tax rates will be. This likely won’t happen for a good long while, so we will continue to monitor the situation.

Related: File your tax return for free with Credit Karma!

Topics: Taxes

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