Tax Reform and Baby Boomers
Tax Reform and Its Effect on Baby Boomers
The new Tax Cuts & Job Act (TCJA) has been a hot topic most of this year, both in social and financial circles. Tax reform will have different effects on many taxpayers in different situations.
Previous articles have discussed how millennials are affected by the TCJA tax reform, and now another group is in the spot light. Baby Boomers it’s now your turn.
To assist you in visualizing just how tax reform will affect various individuals in the baby boomer generation, we’ve provided a Tax Reform Calculator. Check out the different scenarios and create your own to give you an idea where you stand.
As you hear the drum roll in the background, we are about to reveal the parts of the TCJA that will mostly affect baby boomers.
- The standard deduction has almost doubled
For each filing status, the new standard deduction has almost doubled. What this means is that many taxpayers who have been itemizing their deductions in the past on a Schedule A will have no need to do it on 2018 taxes.
However, there may be situations where it will be more advantageous to itemize. Some examples such as high mortgage interest, medical expenses, and charitable contributions, to name a few.
You need to remember, however, that Congress has repealed certain types of itemized deductions. Some of these are tax preparation fees, investment expenses, and un-reimbursed employee expenses.
The 4,050.00 personal exemption has also been eliminated, but the increased standard deduction will help to make up the difference for most of the boomers.
- Tax bracket rates have been adjusted
Over all, most of the different tax brackets are being taxed at a lower percentage. In addition, the actual tax brackets cover a larger range of income. What this means to you is that you can earn more money without moving up to a higher bracket.
Tax Reform Calculator
Our simple overview illustrated how the tax reform will affect baby boomers in various tax situations, but how will it affect you?
Each of us has our own unique situation and for that reason, our tax reform calculator has been adapted so that you can calculate your 2018 taxes based on the new law. When you visit our Tax Reform Calculator page, you’ll see several scenarios already setup for you to see.
After looking at those, we encourage you to click the one that says Create a Custom Scenario and input your estimated 2018 figures. Use your 2017 tax return as a guide so that you don’t forget anything.
We invite you to leave a comment below if you have any questions or suggestions. We always look forward to comments from our readers and subscribers, and our friends at The Tax Foundation.