Months after the biggest tax legislation enactment since 1986, the TCJA (Tax Cuts and Jobs Act) has everyone wondering, what does this mean for me, specifically as a millennial? Since every taxpayer’s facts and circumstances differ, and there is not a one size fits all answer, we tend to give the answer “it depends”. As millennials are now beginning to enter early adulthood, becoming working professionals, their taxes start to become a greater concern. Fortunately, millennials were positively affected by the TCJA, illustrated below:
Higher standard deduction – for the average wage earners, who take the standard deduction rather than itemize expenses, the deduction has nearly doubled!
Student loan interest deduction – many deductions seem to be no longer deductible, or limited, (example real estate taxes for home owners) with the new bill. However, one deduction that has remained intact is student loan interest. For those millennials still paying off their student loans, you can deduct the interest, even with taking the standard deduction.
Less taxes to pay– As the bill’s name states, lower rates have been granted as the tax brackets have all shifted and rates have been dropped. For those traditional W-2 earners, that means you should be seeing a bigger paycheck every week.
Child tax credit – As millennials are transitioning to young parenthood, those beautiful children may have just become more valuable. The child tax credit has now doubled and includes a refundable portion.
Depending upon your specific tax situation the TCJA may have been had a beneficial or negative impact. Overall it seems the impact for millennials remains positive. Should you have any questions about specific facts and circumstances regarding your personal taxes, please contact your tax advisor.
