Tax Prep & Planning

2018 Tax Brackets – What’s Your Bracket This Upcoming Tax Season?

The tax reform changes made by the Tax Cuts and Job Act (TCJA) affect your upcoming 2018 tax return, including rates and brackets.

Despite changes made by the TCJA, U.S. taxes are still based on a “progressive” system, which means your tax rate increases as your taxable income amount does.

Taxable income is the basis for using the tax brackets below. It is generally calculated as gross income, less any adjustments, less either the sum of itemized deductions or the standard deduction, whichever amount is larger.

A Summary of Tax Tables for 2018

Here are the numbers for tax year 2018 that you’ll use for the return you’ll file in 2019. They are different from the numbers and tables that you used to prepare your 2017 tax return in 2018.

Similar to previous years, there are still seven tax rates, broken down by filing status. The top tax rate is now 37%, while in prior years it was 39.6%. The other marginal rates are: 10%, 12%, 24%, 32%, and 35%.

2018-tax-brackets-individual

MFJ tax rates 2018

married filing separate tax rates 2018

Image source: Forbes

2017 VS. 2018 Tax Brackets

To compare the old with the new, view the 2017 and 2018 tax tables below. For additional context, read on and we’ll give you an outline of the new tax brackets and what you need to know.

2017 tax brackets

2018 tax brackets

Can You Get Into a Different Tax Bracket?

Simply put, yes. Your marginal tax rate is associated with your taxable income (not salary or gross income) and there are strategies to reduce your marginal tax rate. Here are a few potential tax deductions and exclusions that may reduce your marginal tax rate. Most of these must be in place by the end of the year. If you missed these strategies in 2018, consider them for 2019.

  • Contributing to a retirement savings account or deductible IRA
  • Offsetting capital gains with losses
  • Paying student loan interest
  • Itemizing deductions if they’re more than your standard deduction
  • Paying alimony (for divorce decrees finalized before 2019)

Have Questions About the 2018 Tax Brackets?

If you need help understanding how the new tax brackets or tax reform impacts you, our experienced and highly qualified tax advisors can help.

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