The tax reform has had mixed reviews so far, but learning how it will affect you is important to help you stay on top of your money and debt management. When it comes to business, economists think the tax reform bill will boost the US economy, increasing the country’s GDP by 0.8 percentage points over the first decade. But what does the tax reform mean for you and your household? Here’s how the tax changes will affect your taxes, student loans, and mortgage, so you can stay out of debt.
Less Tax, More Money For Debt?
The Tax Policy Center says that the average person will receive a tax cut of approximately $1600 in 2018. However, it depends on how much income you make. Some people might not have any benefits. The wealthier you are, the more of a tax break you’ll experience. The amount of $1600 could be useful to have as extra money, as it could be used to help you pay off some of your debt. It’s often a good idea to use any extra money you receive for your debt management so that you can improve your financial portfolio. In this way, the tax cut could be valuable.
It’s Essential To Work On Debt
If you’re in debt, it’s important to keep working hard to eliminate it, as well as to boost your savings. These financial basics can help you better manage the changes that will occur due to the tax changes. Remember, not everyone is going to benefit from the tax cuts, so it’s worth keeping a close eye on your money. If you’re going to be taking out credit, make sure you read reviews of credit cards on offer to make the savviest financial decisions and prevent further debt from weighing you down.
How The Tax Reform Will Affect Student Loan Debt
The Senate and House tax bills risked making higher education costs more expensive for students. One of the ways in which this could’ve happened is that the deductions for interest paid on student loans were going to be eliminated, which was a frightening prospect considering that approximately 12 million people used that deduction in 2015. But, a new version of the House bill has maintained that this benefit will remain. Other benefits for students includethe Lifetime Learning Credit, which allows taxpayers to deduct some of their tuition costs and fees.
How The Tax Reform Affects Your Mortgage
Mortgage interest deductions have been useful to homeowners in the past, but now they will experience changes under the tax reform. Mortgage interest deductions are used to deduct interest homeowners pay on loans they take out to build, buy, or renovate their homes. This deduction could also be gained on loans for people’s second homes or holiday residences. Now, deductions for home equity debt has been eliminated, unless the homeowner is going to use the money for home improvements. However, deductions for people’s second homes will still exist, with a $750,000 limit in aggregate to the mortgage debt.
The tax reform is shaking things up for the economy, businesses, and individuals. If you’re in debt, it’s essential to know more about the changes so that you can keep your financial portfolio in healthy condition. The key is to manage your debt better so that you won’t be greatly affected by the changes that will affect taxes, mortgages, and student loans.