ATLANTA — New federal tax changes that take effect this year could reshape what millions of Americans owe the government.
Channel 2 Consumer Adviser Clark Howard broke down what it means for your wallet on Channel 2 Action News at 5 p.m.
He says that this is great news for most taxpayers because of the benefits from last year sticking around and special deals that Congress put in the tax code to lower taxes, at least for now.
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“The part that helps our taxpayers is the limitation on deducting taxes on your itemized deductions went up from $10,000 to $40,000,” said CPA Nick Simonic.
That can mean big savings for homeowners who itemize.
Families with children are also seeing relief as the child tax credit was raised from $1,700 to $2,200 per child.
“The tax credit used to be $1,700, and it’s went up to $2,200, so that’s a $500 increase per child, and I have six kids,” Rev. Josh Johns of Whitehouse Assembly said. “So you do the math; it’s a huge blessing.”
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Depending on their income, seniors 65 and older may qualify for an additional $6,000 deduction.
“It was the $2,000 additional standard deduction for 65 and older and also the bonus deduction of up to $6,000 for those under $75,000. I got a double blessing,” Karen Torley said.
Also new this year, there are no federal taxes on tips for service workers.
Some W-2 employees will still not be able to deduct job-related expenses.
Howard says that if you get a surprisingly large refund on your 2025 taxes, you should reduce your withholding with your employer. Otherwise, you’re making an interest-free loan with the government by paying more in taxes every pay period than you actually need to.
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