With just a few weeks until 2019, it’s important to get prepared for the new year. Even though it’s only December, it’s never too early to start thinking about tax season. If you’re wondering what you should know and the proposed tax brackets and numbers for 2019, we’ve got you covered.
In July and August, the consumer price index (CPI) increased .2%, and in September it increased .1%. The CPI measures the cost of goods and services, which equals your cost of living. Typically, when CPI doesn’t change much, it’s expected that interest rates will pretty much remain the same. However, for 2019, the IRS is making a change to figure out cost-of-living adjustments. Under the Tax Cuts and Jobs Act (TCJA), the “normal” CPI has been replaced with a “chained” CPI. This means that a chained response will measure how consumers respond to the higher prices compared to just measuring the higher prices. For taxpayers this means that inflation adjustments will appear smaller. All of this is important to be aware of because inflation and cost-of-living adjustments are typically seen in tax legislation and why you will likely see changes every year in terms of deductions.
To start preparing for tax season, these are some projected numbers (not actual). The below tables came from information originally found in this Forbes article.
Tax season can be tricky to manage, especially when things could change from the previous year. The best thing you can do is research and stay up to date as much as possible or hire a tax professional to help you out. We want you to be prepared too, so be sure to check in with us December 19th to see what else is in store for 2019.