Passing the $1.4 trillion tax reform bill was a win for the Republican Party. The question now is will the largest tax code overhaul in 30 years be a win for Alabamians?
WAAY 31 spent the day talking to local accountants about what this will mean for people here in the Tennessee Valley.
The first thing you need to know is the changes will not affect you this upcoming tax season. The real impact will not be felt until you file your taxes in 2019.
“The thing about Alabama is we piggyback on federal. So any kind of change that happens on the federal level it automatically changes Alabama, but there are no direct provisions changing Alabama though,” Hall, Albright, Garrison & Barnes Certified Public Accountants & Consultants, Corporate Tax Division Manager Derek Morgan said.
Morgan believes this tax reform will not only benefit big businesses, it’s going to help some of your local mom and pop shops, too.
“It’s going to be able to help business owners keep additional capital to help put back into their business,” Morgan said.
The tax cut could also be a boost for individuals and families; in particular singles with no kids filing with a standard deduction, single parents and Middle Class families thanks to the increase in child tax credit.
“With your general family of four, which is what we see most often in middle class, it’s probably going to result in some savings,” Morgan said.
Taxpayers not making out as well are singles with no children who itemize and Individuals paying alimony. The new bill no longer gives a tax deduction to the person paying alimony and it no longer requires the person receiving it to pay taxes on it.
“So it’s going to be a huge change two divorces in the future, but that’s another year off from impact,” Morgan said.
There’s also a provision on home mortgages over $750,000, which may not have that big of an impact locally give the median home price is significantly below that amount.
The tax cut may also help local schools; because it will allow parents to use their 529 retirement plan to pay for private school tuition.
The elimination of the Affordable care act penalty will go into effect this tax season, so if you did not have health insurance in 2017 you will not be penalized.