Higher limits are intended to prevent the increase in brackets due to inflation, which can push workers who received annual wage increases due to the cost of living to higher tax categories, even though their standard of living has not changed. As a result, higher provision thresholds could provide relief to some taxpayers who are in lower tax brackets, Tim Steffen, Baird's director of tax planning, said in an email. The IRS is increasing tax brackets by approximately 7% for each type of tax filer, such as those filing separately or as married couples. The annual gift tax exclusion is the amount you can donate to another person without having to pay a gift tax.
Only about 14% of taxpayers itemized their taxes after the approval of the tax reform, or a 17 percentage point drop compared to before the law, according to the Tax Foundation.