It's now 2018, and a raft of changes to the tax code are in effect – including updates to income tax brackets.
The Tax Cuts and Jobs Act, signed into law by President Donald Trump in December, maintains the same seven-bracket structure that was in force previously. However, Congress has tweaked the rates and the income levels at which they apply.
Prior to the new law, the seven tax brackets were 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.
Now, the tax code pegs the new rates at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.
Financial advisors have been concerned about the rates and brackets because they are instrumental in shaping financial planning strategies. That includes managing retirees' income in order to get the preferential rate of zero on long-term capital gains and dividends.
"The rates are one thing, but the brackets — we want to know at what income levels do these brackets apply," said Keith Fenstad, partner and director of financial planning at Tanglewood Total Wealth Management in Houston.
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