00:00 Who
The IRS just released its new tax brackets and rates for the next fiscal year and these numbers determine how much of your income is taxable. Here’s a breakdown of the big changes you need to know this tax season by senior author Kerry Hannon. So Kerry, let’s start with the basics here. What do tax preparers know about the new brackets and rates?
00:17 Kerry Hannon
Yes, you’re right mate, the biggest thing that happens every year is that the government, the IRS changes your tax bracket to adjust for inflation. So, you know, it’s what they call a sweeping bracket so you don’t get your income in a higher bracket because of inflation. So that’s what we’re seeing this year. It is also converting them to eee-UH with inflation.
00:50 Who
I got it. So if someone earns the same amount in 2024 and 2025, what kind of difference will they see when they file the following year? Is there any difference at all?
01:00 Kerry Hannon
Yes, you know, interestingly enough, you can actually end up paying less because if you get the same amount in 2024 and 2025 Uh because of this adjustment in the melting indices, the new brackets and the UH captures that the normal decrease. So you can pay gradually.
01:17 Who
And what about the tax picture for retirees? How does that change?
01:23 Kerry Hannon
Yeah, so this kind of big thing that’s happening in the new tax bill is that seniors, if you’re 65 or older, they get a little bit more and 2028. So I think 75,000 people and 150,000 couples get 6,000 so that’s 6,000 of that. For that one lump that retirement can look forward to.
01:58 Who
Now, the state and local tax cuts, also known as salt, jump from 10,000 to 40,000 this year. Why this story and who stands to gain the most?
02:11 Kerry Hannon
Ally, if you’ll excuse me, I wanted to say one thing about the last question that the Medicaid Uh tax bill, there are some big changes in Medicaid that will affect seniors in terms of increased costs and long-term care. So, back to the salt. I’m sorry. So it’s like there’s a win and it’s impossible to lose with the elders there on the tax bill. But UM GALI The interesting thing about the salt that raised the reduction, which is amazing egxume that, but that’s where you live, talk to the high tax of local and national tax, this is important. This is a great way to reduce your debt. This is what happens when you write ih. And then the idea that the effort is you might want to try to do a little planning so that if your local laws allow, you can take all the deductions for one year.
02:51 Who
And finally Carrie, we hear tax advisors talk about the ruling deduction. What does that mean? What is compounding and how can it help people maximize their tax returns?
03:07 Kerry Hannon
Yes, dieting is kind of a big deal for a lot of people because yes, regular dieting is pretty cool these days. Uh but if you’re a guilty person and want to give your reduction the opposite, you need to fold over that normal reduction. So one way to do that is to say that maybe two years of grace reduction might be all to one year and you get the full effect of that illegal reduction because you’re above the standard reduction. So that’s one way to do that. This can also help with medical expenses and the type of getting it above where certain percentages need to pass to be able to write those expenses in excess of money.
03:52 Who
And Carrie, great insight. Everything we need to know about the new tax. Thank you very much.
03:56 Kerry Hannon
Thank you, ellie.
03:58 Speaker a
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