The Tax Cut and Jobs Act (TCJA) passed at the end of 2017 and the SECURE (Setting Every Community Up for Retirement Enhancement) Act passed at the end of 2019 radically changed your tax picture.
Most Americans are going to pay less in taxes under the tax brackets, and a few are going to use this great opportunity to permanently lower the taxes they pay. The COVID-19 pandemic and relief acts also spurred new tax wrinkles you should know about.
I want to emphasize that this is a limited opportunity. The 2017 rules are scheduled to expire in 2025 (if they don’t disappear sooner under a new administration), and most taxpayers will see a tax hike.
However, this sneaky IRS move means you’ll probably pay more in taxes even before they expire. To reduce the impact of the new tax laws on government revenue, the IRS changed how it increases things like thresholds, deductions, and credits for inflation.3It sounds like a minor procedural move, but it’s actually a big deal. In plain English, this change means that many taxpayers will “creep” into higher tax brackets as their incomes grow because the tax brackets themselves won’t increase as much as they used to for inflation.
Bottom line: many taxpayers will pay more in taxes over the next few years due to this hidden tax increase. It might be only a few hundred dollars every year, but over time, even small tax increases add up! Unless you take steps now to reduce your taxable income. The current tax rates might be the lowest you’ll see for the rest of your life, and I want you to make the most of them.
All 6 opportunities in this guide are actions you can take right now to potentially lower your taxes this year and in the years to come. I strongly recommend that you take this list, along with your tax return, to your CPA and financial adviser to see which tax reduction opportunities have opened up for you.
