Staying up-to-date with tax laws can be challenging, as they are subject to change on a regular basis. Here are a few ways to stay informed:
- Follow updates from the IRS: The IRS issues regular updates on changes to tax laws and regulations through its website and social media channels.
- Consult with a tax professional: A tax attorney or CPA can help you stay informed about changes in tax laws that may affect your personal or business finances.
- Check for updates on the IRS website: The IRS website is a good source of information on changes to tax laws, including new legislation and regulations.
- Sign up for tax newsletters: Some organizations, such as the Tax Foundation, offer tax newsletters that provide updates on tax laws and regulations.
- Keep an eye on the news: Tax-related news is often covered by major media outlets, so staying informed about tax-related news can be a good way to stay informed about changes in tax laws.
- Review publications: IRS publications such as the IRS Publication 17, Your Federal Income Tax, and Publication 5307, Tax Reform Basics for Individuals and Families, can be helpful in understanding the tax laws.
It is important to keep in mind that while keeping updated with the tax laws, one should also consult professional tax advisor to be sure of the applicability of the tax laws.
Trump Tax Reform
The Tax Cuts and Jobs Act (TCJA) was a major tax reform bill that was signed into law by President Donald Trump in December 2017. The TCJA made significant changes to the U.S. tax code, including:
- Lowering individual income tax rates: The TCJA lowered the top individual income tax rate from 39.6% to 37%.
- Increasing the standard deduction: The TCJA nearly doubled the standard deduction for individuals and families.
- Limiting the state and local tax deduction: The TCJA capped the state and local tax (SALT) deduction at $10,000.
- Increasing the child tax credit: The TCJA increased the child tax credit from $1,000 to $2,000.
- Repealing the individual mandate: The TCJA repealed the individual mandate under the Affordable Care Act, which required most individuals to have health insurance or pay a penalty.
- Lowering the corporate income tax rate: The TCJA lowered the corporate income tax rate from 35% to 21%.
- New Pass-through Business Income Deduction: The TCJA created a new deduction for certain types of business income earned by individuals through pass-through entities such as partnerships, S corporations, and sole proprietorships.
The TCJA had a sunset provision that many of the individual provisions would expire after 2025, which means the tax laws would revert back to pre-TCJA rates and deductions. The new administration and Congress would have to act to make the provisions permanent.
How Did SALT Deduction Change Affect California?
The Tax Cuts and Jobs Act (TCJA) signed into law by President Donald Trump in December 2017, included a cap on the state and local tax (SALT) deduction at $10,000. This change has a significant impact on taxpayers in high-tax states like California, where state and local taxes can be quite high.
Before the TCJA, taxpayers in California and other high-tax states could deduct all of their state and local taxes from their federal income tax. However, the SALT deduction cap of $10,000 means that many California taxpayers are now unable to fully deduct their state and local taxes from their federal income tax.
This has led to some pushback, with some California legislators attempting to find ways around the SALT deduction cap. For example, some California lawmakers proposed allowing taxpayers to make charitable contributions to a state fund in lieu of paying state income taxes and then deducting the contributions as charitable donations on their federal tax returns.