5 Biggest Tax Changes That Americans Should Know
With the advent of online tax software like TaxAct, filing taxes has become significantly easier. Yet, despite the convenience of free e-filing, it’s still essential to stay informed about the latest tax changes. Understanding these changes can help you make the most of your deductions and avoid potential pitfalls. Here are the five biggest tax changes that every American should know about. 1. Standard deduction increases One of the most significant tax changes is the increase in the standard deduction. This deduction is a specific amount of money that you’re allowed to deduct from your income before calculating your tax liability. For the 2021 tax year, the standard deduction for single filers has increased to $12,550, up from $12,400 in 2020. For married couples filing jointly, the standard deduction has risen to $25,100, up from $24,800. 2. Tax bracket adjustments The federal income tax system is progressive, meaning the rate of tax increases as the taxable amount increases. For 2021, the tax brackets have been adjusted for inflation. While the number of tax brackets remains the same, the income ranges for each bracket have slightly increased. This means you could potentially fall into a lower tax bracket, reducing your overall tax liability.