During the last quarter of 2017, the Tax Cuts and Jobs Act was passed into law–the first major piece of tax reform legislation since the Reagan era. As with taxes in general, thinking about the tax code and accompanying legislation can feel overwhelming. However, since it will affect you and your business, you need to know what some of these changes are and how they can impact your bottom line.

First: the new tax reform bill won’t impact your 2017 taxes. File those as usual–you won’t see any of the below changes until you file your 2018 taxes. However, it’s a good idea to consult with a tax professional to decide what changes you need to be making now, if any, in order to prepare yourself for filing your 2018 taxes.

Below are some of the most significant changes in the tax code that have their origin in the background of the overarching stated goals of this tax legislation.

Changes in Marginal Tax Rates and Brackets

Tax brackets refer to specific ranges of income and their corresponding tax rates. For example, someone making $120,000 might be taxed at a flat rate for the whole amount. This is a tax bracket. With marginal tax rates, however, your income is not taxed at one rate but at several different rates, depending on your income. For example, if your income is $120,000, your tax rate with marginal tax rates wouldn’t be a flat 50%. You’d be actually taxed 10% on the first $20,000, 20% on the next $20,000 and so on. The good news is that for 2018, the tax brackets have shifted, and almost all of the marginal tax rates have been cut. That means nearly everyone will have lower income tax rates in 2018.

Changes to the Standard Deduction

Especially for those who itemize their deductions, it should be noted that on the 2018 tax reform bill, the standard deduction has almost doubled. Keep in mind that taking the standard deduction is the most common way that Americans overpay on their taxes. Also, the 2018 tax reform bill eliminates the personal exemption—the amount a taxpayer gets to deduct from their taxable income for themselves and any dependents claimed on their tax return. This is worth keeping a close eye on. For most taxpayers, taking the standard deduction will simplify this part of the tax filing process, but it should still be compared to what would happen if you itemized deductions instead of simply taking the lump sum standard deduction.

Child Tax Credit and Other Changes for Taxpayers with Kids

Good news for larger families–the standard tax credit has doubled from $1000 per qualifying child under 17 (for married couples filing jointly with incomes of less than $110,000 or individuals filing less than $75,000 individually) to $2,000 per child. The new tax code also allows a lot more flexibility for users of the 529 plan, which has traditionally been used for college savings. It can now be applied to private schools as young as elementary age. Be sure to consult with a financial advisor before taking funds out of your 529, however, so you understand potential consequences.

Changes for Homeowners

In the current tax law, homeowners are allowed to deduct the interest they pay on their primary residence and/or second home, up to a maximum of $1 million in original mortgage principal. This can include more than one loan—as long as the total is below the $1 million limit—and can include loans to refinance your home as well as mortgages to purchase the home. The new maximum in the tax reform bill is $750,000 in original mortgage principal, so this is worth keeping in mind when purchasing a new home or taking out a refinancing loan in 2018. Taxpayers with existing mortgages between $1 million and $750,000 will be grandfathered into the old deduction, however.

Medical Expenses and Health Care (Obamacare)

The Adjusted Gross Income (AGI) barrier for deducting medical expenses has been lowered from any medical expenses over 10% of AGI down to 7.5% of AGI, which is good news for those with large medical bills. Also, the new tax bill further “defangs” Obamacare by repealing the individual mandate, meaning that taxpayers will no longer pay a penalty for not having insurance starting in 2019.  

Deductions That Are Disappearing

Not all deductions have increased–some are disappearing entirely in 2018. These include deductions for casualty and theft losses (except those attributable to a federally declared disaster), unreimbursed employee expenses, tax preparation expenses, alimony payments, moving expenses, and employer-subsidized parking and transportation reimbursement. Contrary to rumors, teachers will still be able to deduct classroom supplies.

Keep in mind that this article is merely meant to describe some of the changes present in the new tax legislation and how they may affect you. You should consult with a tax professional in order to properly prepare yourself and your taxes ahead of the 2018 filing season. Hopefully, this new tax law and its significant changes will mean that you pay less in taxes in the years ahead!