Both state and federal tax codes can change each year, and if you’re not up to date on these changes, you may end up filing your taxes wrong or missing out on possible benefits that could help you out financially.
Donald Trump has put in place a tax-reform bill that will go into effect in 2019. New tax brackets will be established, so it’s important to be aware of these when filing. There will also be new exemptions. Michigan is one state that has benefited in 2019 from reestablished exemptions.
A tax attorney in Detroit explained that, “Michigan was affected in 2018 by the Tax Cuts and Jobs Act of 2017, which zeroed out the federal personal exemption and also eliminated our state’s exemption. In 2018, however, we’ve restored that exemption.”
One of the most notable changes for Michigan residents is that Michigan’s legislature passed a law to increase the personal exemption to $4,050 for the 2018 tax year.
The new tax-reform bill allows businesses to qualify for a 20 percent business income deduction. Other deductions for businesses have also been included in the new federal tax code, including ways to expense business property. If a small business provides paid family and medical leave to their employees during the 2018 and 2019 tax years, they may qualify for business credit.
Other Changes in Deductions
The new tax-reform bill allows for various other changes in deductions including a lowered limit for medical deductions. You’re able to claim medical expenses as long as you provide an itemized list and these expenses exceed 7.5 percent of your adjusted gross income.
Charitable deductions are still allowed in the new tax system; however, you must claim at least $12,000 in charitable donations if you’re single and $24,000 in charitable donations if you file jointly. If you don’t meet this standard deduction, you may need to include donations from past years.
For those with a high net-worth, the exemption for your inheritance has been doubled to $11.18 million. Married individuals can double this exemption to $22.36 million. In 2026, this exemption will fall back to $5.6 million.
Knowing the tax code changes each year can be difficult because each year government officials will continue to change and they will continue to reform the laws. The simplest way to ensure you receive the most deductions and exemptions possible is to speak to a tax attorney or an accountant before filing to ensure your taxes will be filed on time and you can walk away with the most money in your pocket.