[Latest update] Republican lawmakers in the House and Senate have now passed a combined tax reform bill along party lines for President Trump’s Tax Reform measures under the Tax Cuts and Jobs Act. See the table below that contrasts changes from earlier versions in each chamber versus what is in the final bill that goes to the President for signing into law. These tax reform changes are aimed at building on Trump’s promises (per prior updates below) to streamline the US tax code, cut several itemized deductions and lower large corporate and small business taxes.
|Category||House Republicans Bill||Senate Republicans Bill||Reconciled Final Bill for Trump|
|Tax Brackets & Rates|
(see the updated 2018 tax brackets under the final/reconciled bill)
|Go from seven to four tax rates and brackets: 12%, 25%, 35% and 39.6%. For single filers, corresponding income brackets will be up to $45,000, $200,000, $500,000 and $500,000+. For married people, those brackets will be up to $90,000, up to $260,000, up to $1 million and over $1 million. Bill also includes a 6% surtax or "bubble rate" that applies to those with AGI over $1 million ($1.2 million for couples)||Keeps seven individual income tax brackets per current tax model (vs 4 in House tax plan), but the 12% bracket would replace 15% bracket. Top rate cut to 38.5% vs 39.6% currently in place. Individual tax cuts would sunset after 2025||Maintains 7 individual tax rate brackets - 10%, 12%, 22%, 24%, 32%, 35% and 37 % - which will start in tax year 2018 and expire by the end of 2025 (like bush-era tax cuts). The top rate is a 2.6% fall from the current top rate of 39.6% and raises income thresholds to over $500,000/$600,000 (single/married)|
|Standard Deduction and Personal Exemption||Nearly double standard deductions to $24,000/$12,000 (married/single filers). ; Elimination of personal exemption||Same approach as house to nearly double standard deduction thresholds. Single parents would get a $18,000 standard deduction. Personal exemption eliminated. These would only be in place till 2025, after which these deductions and exemptions would return to current levels||Standard deductions doubled to $24,000/$12,000 (married/single filers). Elimination of personal exemption until 2025|
|Child Tax Credit (CTC)||Raise to $1,600 from current $1,000. Increases income thresholds ($115,000/$230,000) for the CTC eligibility to allow more families to claim the credit. Add a new $300 family tax credit for each parent and non-child dependent.||Increase CTC to $2,000. This is much higher than House tax plan bill. Offers a $300 per year “flexibility credit,” equivalent to the family tax credit||The CTC is key provision for selling tax reform to middle to lower income families. Senate provisions to double to $2,000 per child from $1,000 were adopted. A $500 credit was also added for non-child dependents. However will have income and deductibility restrictions whereby it would only be refundable up to $1,400 and start to phase out at $200,000/$400,000 in income. The higher CTC would expire by 2025.|
|Eliminated Itemized Credits and Deductions||State & local income and sales taxes (SALT) deduction, Medical & long-term care expenses, Moving expenses, Alimony payments, Tax Preparer fees, Student loan interest and Teacher classroom expenses||Senate plan was modified to allow up to $10,000 in state and local property taxes (SALT) deductions on tax payer's federal IRS returns||Senate provision adopted to limit state and local property taxes (SALT) deductions to $10,000 in on tax payer's federal IRS returns. Final bill also has several provisions that eliminate a slew of tax breaks such as deductions for moving expenses and tax preparation costs|
|Reduced Itemized Credits and Deductions||Reducing the following deductions: Mortgage interest (limit to $500K loans vs current $1M limit), Property taxes (limited to $10,000)||Senate plan would keep mortgage interest deduction for loans up to $1,000,000||Mortgage interest deduction for existing homeowners will remain in place ($1 Million). For new homes, taxpayers will only be able to deduct interest on up to $750,000 in mortgage debt|
|Kept Itemized Credits and Deductions (current)||Keeps Charitable contribution deduction (qualifying categories to be streamlined) and reinstated Adoption tax credit (worth up to $13,750) which was originally cut||Keeps child and dependent care credit, keeps charitable donations deductions and Medical & long-term care expenses deductions (lowers threshold back to 7.5%) and education relief deduction for graduate students||Retains tax breaks for charitable donations, child and dependent care credit, education relief, and Medical & long-term care expenses deductions (lowers threshold back to 7.5% for next 2 years, before going back to 10% from 2020)|
|Earned Income Tax Credit (EITC)||No change and preserved at (current levels)||No change to the EITC credit and preserved as is||EITC will remain unchanged|
|401(k) Retirement Plans||No Changes or impacts (see 2017 and 2018 plan limits)||No changes or impacts to current levels. Also the final Senate bill scraps an earlier proposal that looked to eliminate the pre-tax retirement account catch-up contributions for those over 50||No change to retirement plan thresholds or tax deductibility|
|Estate and Death Tax||Double the estate or death tax exemption to $11 million. This tax would then be fully phased out and eliminated after six years (2024)||Doubles the exemption for the estate tax but does not fully eliminate it like House bill proposal||Doubles the exemption for the estate tax per Senate provision, but estate (or death) tax remains in place|
|Alternative Minimum Tax (AMT)||Eliminated entirely from 2018||Following last minute negotiations to pass the Senate bill the AMT will be partially retained via raising the amount income exempt from AMT (vs a full repeal until 2026). The idea behind this is to address vote optics and ensure that business wealthy individuals pay some level of AMT||Senate provision generally adopted by eliminating the corporate alternative minimum tax, but keeps individual AMT. The individual AMT income exemption threshold will be raised to reduce the number of tax payers subject to this tax|
|Corporate Taxes||Permanently cut the federal corporate tax rate to 20 percent (from 35 percent) from 2018. Immediate write-off for new equipment and preserves R&D tax credit||Same as house and will stay in place permanently. But will delay the tax cut until 2019. Similar to House plan with regard to treatment of new equipment write-off and R&D credit||Cuts corporate tax rate to 21% from the current 35% rate. Change would take effect from 2018|
|Small Business Taxes||Lower the maximum rate to 25% on small business income for pass through like entities (e.g. sole proprietorships, partnerships and S-corporations). |
Provides a new small business tax rate of 9 percent for businesses earning less than $75,000 in income. The benefit is phased out as taxable income exceeds $150,000 and fully phased out at $225,000.
|Will reduce the burden on pass-through businesses by adding a small business deduction equivalent to 23 percent of pass-through income (this was originally 17.4%, but raise to lower impact on deficit)||20% business income deduction for the first $315,000 in income earned by pass-through businesses. The first $75,000 of pass through income would be subject to an 8% tax rate|
|Global & International Taxes||Remove double taxing of foreign income, provide a lower one-time repatriation tax rate for returned overseas/offshore corporate funds (Illiquid assets would be taxed at a 7% rate, liquid assets like cash which would be taxed at a 17% rate). Any incentives that promote overseas job creation will be removed to support US job creators||Also eliminates global double taxation. Will provide a one time repatriation tax to eliminate “lock-out effect” by making it simpler and less onerous for American multinationals to repatriate bring foreign earnings||Eliminates double taxation of foreign income and moves US to a territorial system in line with other western countries. Also has a higher one time repatriation tax rate than Senate and House bills where companies would pay 15.5% on cash assets and 8% on non-cash assets|
|Capital Gains||No change to current rules||No changes to personal CGT. But Senate has now repealed provision that taxed employee stock options when they vested instead of when they were exercised||No changes to current CGT structure. Exclude controversial first in first out stock sales change to appease investment groups who strongly opposed this rule|
|Social Security||No change to tax treatment of SSI income||No changes likely||No changes to treatment of social security income|
|Obamacare Penalty||No change to current Obamacare penalties (individual mandate) for 2017 or 2018||Includes provision to repeal Obamacare’s individual mandate (health care penalty)||Incorporates Senate provision for individual mandate repeal beginning in 2019. Would still be in effect for nein the final bill. Saves $330 billion, but CBO estimates 13 million Americans would be uninsured in 10 years as a result|
Some key updates to date include: (these are regularly updated as information is released)
- The final tax bill will be signed into law by the President. However he may wait until the New year to sign the bill to ensure that automatic spending cuts are not triggered in 2018 due to the increased deficit resulting from the tax bill.
- House and Senate Republicans via conference committee have pulled together a reconciled bill that will now go for a final official vote prior. It has been crafted to ensure Senate approval where the Republican majority is far slimmer than in the House. The reconciled tax bill is expected to pass and go to the President for signature by Christmas.
- Senate Republicans have passed their version of the tax reform bill 51-49, but have had to make several adjustments on the fly to appease several Senators. Further changes will likely be made as the House and Senate members go to “conference” to develop a reconciled bill that can be sent to the President
- The House GOP has passed its version of the tax bill – generally along party lines (227 to 205) – but likely to see significant changes after Senate updates and creation of a single reconciled bill for final passage
- Not one Democrat has voted for the tax bills. Hence final passage of the bill will have to be entirely along party lines. The Senate, where the Republicans only hold a delicate two seat majority, will likely have more influence on what the final/reconciled bill will look like
- The Senate has added a provision to repeal the Obamacare penalty (individual mandate) into their tax reform bill. This is designed to get support from more GOP members and to cut the overall cost of the bill. House republicans have indicated they would support this provision in the final bill
- The Senate’s bill also has provisions to expire various items of their tax reform proposal (e.g AMT repeal and standard deduction increases) by 2025 in order to comply with Senate budgetary rules
- The child credit has been increased significantly to help lower income families. This is an important change as other items in the bill will likely be of more benefit (at least in the short term) to corporations and affluent Americans
See the comments below for reader reviews of the GOP tax proposals. Also please share this article and connect via Facebook or Twitter to get the latest updates and news related to Trump and GOP tax reform proposals.
[Oct 2017 update] President Trump and the “Big Six” group of Republican leaders have announced long awaited details on the Presidents tax reform package/framework. Details are still high level, but here are the key points or guiding principles the President has stipulated for his tax reform package/framework:
Moving from seven to three tax brackets -12%, 25% and 35%. The tax free threshold or “zero tax bracket,” will be $12,000 for single filers and $24,000 for married filers. This was achieved by doubling the standard deduction from current levels. The Alternative Minimum tax (AMT) and Estate Tax will be eliminated, which will benefit the highest income earners the most.
The Presidents tax reform framework eliminates most itemized deductions like the popular deductions for State and Local taxes. But charitable giving and mortgage interest deductions will remain unchanged for all taxpayers. There are also signs that Trump will significantly increase the child tax credit to help working families. It is unclear what will happen to the Earned Income Tax credit (EITC) for next year.
Businesses would also see some benefits under the tax reform plan via a lowering of the corporate rate to 20 percent and the pass-through business rate (for S-Corps) to 25 percent. A potential 10% one-time repatriation tax would also be enacted to encourage US owned companies to bring back assets and corporate profits to the US from their overseas subsidiaries.
It will take some time for Congress to work through the Presidents tax reform framework/guideline and develop concrete proposals (including how cuts will be funded) and and I expect several concessions and modifications to be made before a final tax reform bill is signed. But given the pressure on the Republican controlled Congress to pass major legislation I do think this will get done this year.
[June 2017 update] With the focus on repealing and replacing Obamacare, the Republican controlled Congress and Presidency have not had much time to enact their tax reform plans outlined below. Based on recent news the Trump administration however is still targeting this year to get some kind of tax reform package enacted. But until a unified health care bill is passed or indefinitely put on the back burner, tax reform won’t get the focus it needs. There are however some potential signficant tax changes/roll-backs under the proposed health care reform bills such as:
- Remove the individual mandate, which imposes a tax or penalty for not having health insurance in a given year
- Provide tax credits ranging from $2,000 to $14,000 based on age, filing status and income levels to help cover the cost of obtaining private health insurance
- Removal of the 3.8 percent additional tax on investment income for individuals making $200,000 or more ($250,000 for couples). This was used in part to fund Obamacare subsidies
Again, the above tax changes are tied directly to passage of a unified health care bill – both the house and senate currently have different versions. If the health bill is unable to pass Congress then tax payers will need to rely on the proposed tax reform package for any future tax breaks or credits.
[Updated April 2017] Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn have provided more details and updates to President Donald Trump’s campaign tax proposal (see previous updates below). This includes the following:
- The updated tax proposal eliminates all itemized and regular deductions (including items like home office deductions, state and local) that are part of the current tax code, except for mortgage interest and charitable deductions.
- The standard deduction will be doubled to offset the elimination of other deductions and is line with goals to simplify the tax filing process and usage of itemized deductions.
- Repealing the alternative minimum tax (AMT), 3.8% health care investment tax imposed under Obamacare and the the estate tax (a.k.a.“death tax”)
- Trump’s tax plan still has 3 tax rate brackets (vs. 7 today), but the levels have changed from the prior proposal. They will now be 10%, 25% and 35%. This also means that the top tax bracket rate of 39.6% will be eliminated.
- No taxes will be due on the first $13,000/$24,000 (single/married standard deduction) of income.
- The Tax plan includes, but no numbers were provided, tax relief for families with child care expenses.
- Business Taxes – The corporate rate will fall to 15% and there will be a one repatriation tax on funds companies hold overseas.
- Assumption is that higher economic growth will offset lower tax revenues. However details for this spelled out over the next year as the tax reform package is worked through Congress.
While the plan does appear to have tax breaks for the rich (eliminate investment and estate taxes), the administration is saying that other tax changes would ensure the plan would largely help the middle class. More to come, but please share your thoughts below.
[Feb 2017] With President Donald Trump and Republicans controlling the House and Senate, we are likely to see a number of tax changes in the year ahead if his campaign plans and promises hold. As with everything else, the Trump administration was light on the details but here is what we do know about the proposed Trump tax plan:
- Federal tax rates and brackets would be simplified down to three versus the seven today. Those with a taxable income between $0 and $37,500 ($0 to $75,000 for married filers) would be subject to a 12% tax rate, taxable income between $37,500-$112,500 (or $75,000-$225,000 for married filers) would be subject to a 25% rate. While those with taxable income above $112,500 ($225,000+ for married filers) would be subject to a 33% federal tax rate.
- The standard deduction would more than double to $15,000 for single filers to $30,000 for married couples filing jointly while ending personal exemptions. This increase along with the lower tax brackets would see federal taxes due go down for most Americans.
- Itemized deductions would be capped at $100,000 for single filers and $200,000 for married couples filing jointly. This is down from current levels and in line with Trump’s goal to simplify tax rules and prevent the rich from taking legally gray deductions.
- To promote small business investment Trump would eliminate the 3.8 percent tax on net investment income on people with incomes (MAGI) of over $200,000 for single filers and $250,000 for married filers. The tax rates on long-term capital gains would be kept at the current 0%, 15% and 20%. In a hit to hedge fund managers, there is also a proposal to taxing income from carried interest at ordinary income tax rates.
- A full repeal the alternative minimum tax (AMT) and the estate tax. Under current law, estates valued at more than $5.45 million are subject to a 40% tax rate. Cutting the AMT and estate tax would stand to benefit higher income earners the most.
- The individual mandate (or Obamacare tax as some call it) would also be repealed in 2017, meaning that penalties would not result if people don’y have health insurance.
- The corporate/business tax rate will be lowered from 35% to 15% to become more competitive globally. To encourage the repatriation of earnings being kept by American multinationals in overseas banks, subject to lower local corporate tax rates in those countries, the Trump administration will only subject these funds to a lower 10% corporate repatriation tax rate.
[Update Mar 2017] Following a meeting with business leaders President Trump announced that a major release on details behind his tax reform package is on tap for the coming weeks. Details will be provided covering “comprehensive tax reform both the business side of the tax ledger as well as the individual rates,” according to follow up comments from press secretary Sean Spicer. No exact date was given for release of this information, but Trump indicated it would be “over the next two or three weeks [end of February]…and would be phenomenal in terms of tax….with significant tax reductions.” He went on to say that the tax reforms he is proposing (see below) will, “… lower the overall tax burden on American businesses big-league“. However, until the Obamacare repeal and replacement bill is resolved, it is unlikely we will see much more on tax reforms. My guess is that it will take till Summer before we see more details on the Trump tax reform plan.
While they may get passed by Congress, a lot of Trump’s tax changes won’t go into effect until 2018, since 2017 tax rates and brackets have already been established. Further, the House Republicans (under Paul Ryan) also have an alternative tax plan which while also looking to cut corporate and personal taxes, is not as aggressive as the proposed Trump tax plan.
So in order to get wide scale tax reform passed across all branches of government there will need to be some sort of compromise tax plan agreement. The Trump administration also hasn’t laid out any real plan to pay for these tax cuts and proposed no net spending reductions to offset his tax plan’s $7 trillion cost.
Under a Trump tax plan middle class tax payers would likely see modest tax savings, while those in highest income ranges would actually see the most in savings given the lowering of the highest marginal tax rate, increase in standard deduction and repeal of the AMT. Under proposed Clinton plans middle income earners saw more tax savings while higher income earners were taxed more heavily.
114 thoughts on “Trump GOP Tax Plan, Cuts and Changes in 2017, 2018 and Beyond – Latest Updates and Final Bill”
College students that are filed as dependents on parents taxes don’t get the stimulus $1200 nor the $500? That is ridiculous. I am still paying for my child while she is in school and she also work 30 hours a week to get through school without student loans. Right now the retail store she works for is closed so she has no income coming in. But Im sure the people (not referring to elderly) that go pick up their pay check from the mail box will get the stimulus, including the $500 for the dozen of kids they may have. This country has a long way to go.
Just curious, last year on my taxes (line 20a) reflected the full amount of my social security benefits received of $22,534 which would of been taxable, but fortunately on (line 20b) it reflected a taxable amount of $7,088. Does the new tax law still allow that income reduction? I sure hope so, because it helps me out on less taxable income and the benefit is that I will get a lower AGI. Also, I am guessing that your tax burden is based on the AGI. Please correct me if I am wrong.,
I struggle with a steep student loan payment and that AGI, thank god to the reduction in the income I have to pay taxes on the Social Security Benefits, helped me be eligible for reduction in my student loan monthly payment for 2018. I am keeping my fingers crossed that Trumps tax reform bill did not do away with the Social Security break.
Look forward to verification and imput as well,
The new tax plan benefits everyone a little better over next few years.
On a side note:
I am tired of hearing the rich are getting a break. I am in the upper middle class. And when taxes have gone up and loss of jobs hit my industry with Obama – I stopped/reduced outsourcing around the house and in my spending trends. This means the maid comes every 2 weeks not every week. (some one lost 1/2 of their income) My family takes care of our 5 acres by ourselves now (another part of someone’s income lost). This doesn’t sound great but Rick my yard man depends on all his customers to send his daughter to college. I started making all our deserts by hand instead of going to the bakery. I do not go to the hair salon any more and do it myself. We have stopped going out to eat as much. This all adds up in our economy. Because I am just one household it does not seem much but add up all the middle class households who have done the same.
I keep reading the comments from people with children and how they will be paying more taxes with this tax plan. Seems to me, they are the ones getting the break. What I have not seen addressed is the tax increase for people filing tax returns with NO children. Granted, the standard deduction is doubling but I have been itemizing for years and fully expect our itemized deductions to be higher than the standard deduction. Losing the personal exemptions for just two people is going to hurt us and I believe that we will be paying more in taxes with these tax changes.
I am trying to be optimistic, and believe that these changes are going to benefit us, but it is rather difficult. And yes, we make more than $70K per year.
I definitely saw a big difference in my tax refund. In looking at a side by side comparison of of tax years 2017 and 2018 as Turbotax provides, two things impacted the change from a refund of approximately $1200 to $241: the elimination of the personal deduction and the subsequent bumping of my tax bracket from the 12 to 25% level. I don’t see how this change in the tax law is going to benefit me as a single income school teacher with a mortgage. I’ve seen a gradual reduction in my refunds over the years as the mortgage interest declined, but this was ridiculous!
Does anyone in the government care about the impact on the middle class workers like myself? If so, who is collecting the stories and/or data to present to Congress and Trump? I’d like to be a part of that endeavor.
When the politicians talk about needing to fund the tax cuts, I wonder what they are talking about. The govenment’s money is money taken from the taxpayers, therefore it is the taxpayer’s money. Cutting taxes only means the government will demand less of the taxpayer’s money. The govenment has little if any funding, except the money taken from taxpayers. Government needs to live within a budget. The goverment needs to reduce its cash out to balance its cash in. Each taxpayer has to do that to remain financially stable and so must the goverment. If a person recieves money from the government, it is money that came from the people and businesses that pay taxes. If you have been taxpayer and receive money back from the goverment, you are getting money from yourself and other taxpayers, minus the expense and wages of the layers of government workers that collect, handle and disburse your taxpayer dollars. If you work 5 days a week and are in a 20% tax bracket, essentially you work one day out of the week to fund the government. Taxpayers need to stop bickering and insulting each other and start asking the politicians who use our money: What exactly is taxpayer money being spent on? What is being done to cut unecessary expenses? Could taxpayers handle their money better than the politicians who they pay? What is the fincial experience and training of the politicians that voters hire with their votes? Do government assisstance program effectively empower people to become self-sufficient? It is after all the taxpayers money that is being taken and used by the goverment.
How do we pay for wars (Like the fake one in Iraq)? That was an unexpected expense. How about cost for all the fake unnecessary measures in government buildings (which if a terrorists wanted to, could still achieve their goal, ask any law enforcement agent), the TSA, the unfunded mandates on schools for the ESSA, the overcharging by corporate entities because they know the government will pay whatever, Section 8 (which the government pays for mortgages of private citizens (whereas projects we all own)? Can I go on? These are Republican passed bills that went into effect. Yet they call for small government. Liars all of them. With the tax break on corporations, cities and states will have to balance budgets due to tax cuts and what measly gains we do get will be eaten up plus some by these increases. No infrastructure so you will pay more in car repairs from roads deteriorating. Privatizing to save tax dollars will double on toll roads. Truckers will have to pay more so prices are passed on to consumers, Shall I continue? Keep cutting taxes and then you will know what they do with your money. And remember, the government is not a private company, it is you, you elect, you own, these are your neighbors you elect.
right on!!! Absolutely
All tax details aside, I see quite a few people sniveling about how they have kids: blah, blah, blah. Perhaps you should have considered the cost of children BEFORE you had them? Now you expect the rest of us to help you pay for your kids through all the tax credits and deductions. YOU made the decision to be parents. Live with it.
Single people have never had any breaks. It is cheaper with 2 incomes. The utilities don’t double, yet they get “Head of Household.”
Single people have always paid more and no special treatment.
Here’s my question..I make 30k and with alimony another 13k. My kids are grown- I haven’t reinvested in a home yet.. I’ve never owed taxes until I divorced. Now if I don’t pay quarterly I’m sunk for both State and Federal. I have really no deductions! It looks like to me under this new tax plan.. I’m still sunk. Am I wrong?
The standard deduction is doubling from $12K to $24K. I have to believe this is going to help you.
This plan is going to destroy us financially. My husband is a fireman with no assigned station. He travels more than 20 thousand miles a year just to get to and from work in AZ. Deduction gone. Then we get to claim the food he takes to work as he spends the night there. Deduction gone. I’d still keep my mortgage interest deduction. We have two kids, one 17 and one 12. Oldest is going tom college soon. No tax break. I used a tax estimator for this new bill, and we will owe $5000 to $7000 a yr more. House will be gone.
how about taking those miles he drives to offset it ?
My understanding was that they raised the standard deduction (presumably you can still choose to itemize if your deductions exceed the standard amount.) What they did away with was the standard personal exemption.
As a teacher for 38 years, I have spent around 1 tp 2 thousand a year on my classroom. Your kids will lose out, too.
Why do middle class have to pay , we work our butts off and the low income Benifits . They get free food , free medical , cheap rent and at the end of the year they get 5 or 6 thousand back on taxes and only one parent works .
Repealing the Obamacare individual mandate would increase premiums in the individual insurance market by about 10 percent, which would amount to increases of hundreds of dollars per year for about 7 million mostly middle-income consumers — and up to $1,000 per year for many older people — according to an estimate Wednesday from the left-leaning Center on Budget and Policy Priorities.
Good summary by Washington Post: It’s because of that delicate majority [in the Senate, where GOP has a 2 seat majority] that many White House officials expect a tax bill — if it eventually becomes law — to more closely resemble the Senate bill. Senate Republicans will work to resolve differences among themselves in the next few weeks, but major changes made in the House could upend any agreement.
Senate lawmakers also must grapple with strict rules that regulate how a tax-cut bill is designed. To use special Senate procedures to get around a filibuster from Democrats, Republicans must write a bill that does not add more than $1.5 trillion to the debt over 10 years.
If passed, would apply in 2018
IS THIS PLAN FOR 2017 TAXES OR 2018 TAXES
simply, what is projected medical deductions, for 2018 federal tax .will we able to deduct medical bills?
2017 & 2018 7.5% 0f gross and in 2019 10% of gross
The cancelling of exemptions is going to murder the large families with added tax liability. I do not see shere they address Social Security Income and the formula for figuring tax on Social Security unless they are now going to tax all Social Security, another middle class increase in taxes. I can see no way for the middle class to have any tax cut. They increased the Standard Deduction but took away so many exemption classes that a tax hike is imminent.
Nonsense. The expanded CTC takes care of it.
No, it doesn’t. CTC increase does not include dependent care of elderly parents or adult disabled children. These are not “children” age 17 or less, and they do not qualify for CTC.
Ryan plans to cut Medicare, Medicaid, and Social Security. You know there are assaults on Pensions now causing them to go belly up.
Note that the $1600 Child Tax Credit (CTC) is $1000 refundable (just like now), and $600 non-refundable. The latter means that in the 12% tax bracket it is exactly equivalent to a $5000 personal exemption per child. So even though personal exemptions are to be eliminated (while the Standard Deduction is roughly doubled), the personal exemption effectively lives on in the form of this increased Child Tax Credit.So families with kids do just fine with these changes.
So again its the single person who is paying for you to have kids.
Keeping the 25% tax rate at the same rate it is currently, technically does not give the middle class a tax break, it remains the same. Anyone, like myself, who itemizes will pay a much higher amount in taxes than current. Itemized deductions GIVES the MIDDLE CLASS their break! The new proposed plan does not, unless they drop the rate to 12%.
What do you mean by “Keeping the 25% tax rate at the same rate it is currently, technically does not give the middle class a tax break, it remains the same.” That’s complete nonsense. Look at the actual bracket cutoffs and percentages and run the numbers. People in the new 25% bracket will be at least $3000 better off, all other things being equal. Other changes may make winners and losers, but its more fair to eliminate many deductions that are mostly subsidies to affluent people in expensive houses and/or wealthier high-tax states.
It did nothing for me as a retiree. The took away my right to itemized with the personal exemption which equal more than the lousy $12,000.00 they give me now and raised my tax bracket from 10% to 12%. (Course it doesn’t hurt those on Social Security because most don’t pay taxes on that money)The only one who make out with the new tax plan are those that never itemized. Lets say I have two children and with the person exemption that is over 16,000 and then the standard deduction of 12,000 gave me 28,000 and that’s if I barely had enough to itemized. Most families have a lot more than that. Get real this tax plan doesn’t help anyone but Trump and his rich friends and business who will keep giving the jobs overseas because you don’t want to work for what they are willing to pay.
So does this tax plan affect my tax filing for 2017 taxes or 2018 taxes?
Will only affect your 2018 taxes. No changes for 2017 filings at this point
Single parents may pay more as well as families that have more than two children…..not a good plan…..
83% of Americans use standard deduction while filing taxes. So that being said, 83% of Americans will benefit from this tax plan.
83% in all brackets you mean. Most of the percentage of itemized users are in the middle class. Misleading, statement. Middle class people will not get a tax break because the tax rate will probably remain the same in the 25% bracket and they will lose itemized deductions. Many middle class people will pay more in taxes.
But some that use to itemized will get burned. I do the taxes for a lady who earned about $55,000 in 2016. All that money went to pay her nursing home expenses a good portion of which was deductible as medical expenses. Thus she paid no Federal Income taxes in 2016. Now she will have taxable income of about $43,000 and will pay about $4500 in Federal taxes. So, if she can’t pay all her nursing home bills what will happen to her?
No Gus you live in dream world and can’t see the forest for the trees
I agree with Katie as I am in same situation. Trump tax plan will make me lose my home.
I’m reading medical expenses are still deductible. They go from 7.5 to 10 percent of income so you lose a little here, not the 4500 you state. More misinformation.
I consider myself middle class and live in a high property tax state (NJ). I did the numbers, and even though I’m losing about $28,000 in deductions, I am still coming out paying $2,000 less in taxes. This is due to the lower tax brackets and the fact that I now qualify for the child tax credit because the income limit was raised. I would run your numbers again-this will benefit most middle class.
They didn’t lower them for retirees like myself who barely makes ends meets. They raised them so you must make a lot of money because those are the only ones who get a lower tax bracket.
I’m 64, single and live in Texas…..my property taxes alone are half of my standard deduction. Then my cobra health insurance premiums and medical expenses are twice that. Since my home is almost paid for my interest amount is minimal ….no help there. And generally, I have lots of other deductions such as car mileage, depreciation and maintenance due to my job. I’m not sure how I would benefit…looks like I will owe lots more if I can’t itemize. The only reason I’m a home owner is because of the property tax deduction and decreasing my taxes. There will be no benefit for being a homeowner in my case.
Same here. This is very stressful. Trump’s plan is horrible and single deduction comical. I am in California,
There are provisions for home taxes in the new law. There are medical provisions. I do not understand why you think there will not be deductions? They are limited. If you file joint the standard deduction is 24k. I personally think it is unfair that California and New York get to write off 10k in state home taxes and where I live I only pay 1400 so why do you get to write off more because your state taxes you higher? Not really fair. You do not seem to understand the law.
I think it is you that do not understand the law. Let’s say I am single and retired and I make 30,000 a year. I used to itemize and had about $11,000 in itemized deductions which with the personal exemptions gave me more than $15,000 off my income and my bracket was 10%. I can now only take the $12,000 because my itemized deduction isn’t more than the $12,000 and my bracket just went up to 12%. Get real and this is what he did to a lot of retirees that are not on Social Security because we get taxed on all our income. Even those on CSRS because the government takes away their Social Security even if they have their quarters paid into it unless you make big money like congress. Of course they get both.
I’m sure with Trump being a business man he knows what he’s doing on this tax reform thing have alil faith in him and support him on this because he has already brought more jobs to the US unlike other’s so have faith in him and let him do what he does best business.God bless
While you are drinking the Kool-Aid that #45 is putting out, you should be just fine. But for someone like me I am going to be screwed and end up paying higher taxes. I truly wish that Bernie Sanders had gotten elected. #45 is a poor excuse for a President and Congress is drinking the Kool-Aid and tricking you into thinking you are getting a good deal.
The doubling of the standard deduction is great and long overdue. The elimination of the personal exemption will hurt. I have a net tax increase if the personal exemption gets the ax. The PE should also be doubled, that would be a most favorable tax plan.
I live in massachusetts and make 61000.00 annually. I own a home and pay mortgage interest around 12,000.00 dollars. My state income taxes and property taxes amount to another 8000.00. So my itemized deduction is around 20,000.00. This is to be replaced with a 12,000.00 personal exemption? My taxes are going up clearly, not down . And this tax increase is to give a tax cut to mostly 1% of the population.? I like Donald Trump but I will drop him like a hot potato if he raises my taxes .
The senate version still says you can itemized or mortgage interest. I believe you need to read the fine print. And if you are single and making 61k and only you no one else you got to much house for a single person man at your current income. 12k in interest what the heck is or mortgage payment you must be eating tuna fish and crackers, ramon noodles. Oh and your 8k in property tax man. Not to mention all your utility bills, car payment, and other expenses. You need to make more money, or downsize.
Only if it’s more than the standard deduction. He can have any house he wants just like you can. You need to learn how to figure taxes before you say things are allowed that aren’t.
What about head of household? I have a 16 year old child….. or other singles with even more children? or any parentsa with more than two kids?
No name calling, no politics. Trump’s plan will save everyone in the lower income brackets some tax money. We’ve got to stop comparing everything to people in other brackets especially to the rich and super rich. They pay the highest rates (%) on the majority of their income, and any amount of refund has absolutely no bearing on anything either. They pay the same rate on the same lower amount of income that we do, then they pay higher and higher percentages as their income goes up. If they over paid they get a refund, if they underpaid they pay the balance owed and even add a penalty. In any case the rich pay more in taxes than the average person and they also pay a higher percentage on their total than the average person. The politicians and the media that are against any new tax law are only spewing rhetoric and confusion to get us to make our decisions on their political views rather than pushing for any kind of fair tax system. Talk to an accountant if you don’t understand it as a favorable position for you. Ignore the rhetoric and politics on the subject, they are only thrown out there when the person throwing them either doesn’t really believe in their own rhetoric, doesn’t really know, and/or is only telling us to think a certain way for their own political prejudices. Both sides of the fence do it in order to attempt to offset the other side. Thinking for yourself will counter their effort to try to make our decisions for us.
And who cares what Trump’s tax filings might look like. I congratulate him on being smart enough to have made a lot of money. Hopefully the IRS has checked his returns and made sure they comply with existing tax laws. And we too should take advantage of any tax laws that might benefit us. As far as the rich, maybe they are paying too much, maybe more than their fair share. Maybe a reduction, but still paying a bigger percentage than us, might get them spending a little more in creating more jobs so we all can live a little better life. It really saddens me to see how politics gets in the way and confuses everything today. I’d like to see this country turn and start back the other way where we agreed or disagreed on issues rather than pure politics. Term Limits will be a must for this country to progress and get some real representation of the people. Today all of our representation is political, when’s the last time yours asked you what you think?
What party do you vote for to control you and make your decisions for? Why? New representatives, non politicians, just might drain the swamp. Or is that just another political statement?
“Trump’s plan will save everyone in the lower income brackets some tax money.” SO not true- anyone with children, especially single parents, will pay more. I make $70k/year, my taxes will go up by approximately $2k per year under the latest plan. The increase in the standard deduction and child credit he’s proposing no where near makes up for what he’s taking away. This tax plan is being paid for off the backs of families, especially single parents, and for some reason no one seems to care about that.
kallie – I know depending on where you live, this may be extremely hard to hear – but $70,000 per year is a lot of money in MOST of the USA. I know it is NOT in some places. I lived in Mid-town Manhattan and was making more than that and it was tough to get by! So believe me, I know what you are going through. A few States pay out more to the Federal Government in Taxes in they ever get back. Many States pay less and get more from the Feds than they pay in Year after Year. Those States receiving more than they paid to the Feds also have much lower real estate taxes. Look at NY & California – they have incredibly high real estate taxes, incredibly high state payroll tax etc. and now what is going to happen to those deductions?
The problem really lies at the state level. Believe me, once I moved out of New York because I retired and found out what life is like in a place without all those crazy high taxes, I was in disbelief! Look around where you are now, see that in many cases you would be better off forming your own corporation and hiring yourself as a contractor! Hire others as contractors too! Then you can deduct all your expenses for working! I did that for the last decade I was in NY.
Life can be much better away from those expensive states. And believe me – $70,000 per year is a lot of money to so many people in the USA you would NOT consider yourself in the Lower Tax Bracket! Where I live now the Mean Income is half that and they consider themselves “Middle Class”.
I’m not sure what tax legislation you are reading but the best case you can make for it is that it slightly reduces rates for most taxpayers, while dramatically benefiting corporations, those with pass through entities and families who benefit from estate tax reductions (i.e. the wealthy). At least the Republicons could have stated clearly who will benefit the most – themselves and their donors!
As of 10/06/17 does the plan being proposed include repeal of the 3.8% Medicare tax surcharge on investment income retroactive to 1/1/17?
Brandi, at $24,000 you pay taxes on $16,500 at 10%. That’s $1,650 in 2016. If this tax proposal goes through your personal deduction will double. You’ll pay taxes on only $9,000 of your income. So, $900 versus $1,650. You’d save almost half of your tax payments or $750 per year. Pretty darn good deal for you!! I might be calculating incorrectly. If there is a tax accountant out there, please set me straight.
This tax plan is a catastrophe for the middle class and most small business owners. It eliminates the personal exemption so any families with children will end up with a HIGHER tax liability even with the doubling of the standard deduction. Small businesses set up as pass through entities will also have a MAJOR increase in taxes because the new plan sets a flat rate of 25% on all pass through entity income. This will benefit only the two or three percent at the very top; the vast majority of small businesses have an effective tax rate, under present law, far below 25%. Indeed, if these small businesses are now to be taxed at 25% on their pass through income it will have a catastrophic effect on the economy.
Yep. I am a small business owner, married with a home maker spouse and 2 kids. I have a working class income and my taxes would increase due to the personal exemption eliminations.
Go and learn how to figure taxes before you come with stupid figures like the ones you displayed here.
Brandi, at $24,000 you pay taxes on $16,500 at 10%. That’s $1,650 in 2016. If this tax proposal goes through your personal deduction will double. You’ll pay taxes on only $9,000 of your income. So, $900 versus $1,650. You’d save almost half of your tax payments or $750 per year. Pretty darn good deal for you!! I might be calculating incorrectly. If there is a tax accountant out there, please set me straight.
Jen, I don’t see how it’s mathematically possible to be “in the 10%” bracket and have your taxes double. Your standard deduction is going to double. So, if you are filling joint, $15,000 worth of income is not going to be taxable at all. The remaining income will be taxed at a lower rate. Maybe give an example…my husband and I make $82,000. We deduct $3,000 for mortgage interest and $4,000 in property taxes. We pay X now and it will go to Y. Do that exercise with an accountant and post the results. My bet is that your taxes will go down.
Will new tax rates go in effect this year as promised and if yes, will it retro to Jan 1 of this year? Taxes are killing my small business. Government makes more that the Company makes. Sad.
Life liberty and the pursuit of happiness, so keep up the pursuit.
My question is, are we retirees on SS gong to receive a raise in our Social Security checks in 2018? Also if we do will the government figure away to take it away from us. Our last was given from the federal and taken away by the state. We need something we can put on the table.
You got a raise in 2018 for Social Security and you should have already been notified by them. However, the increase in Medicare my take what you get.
I am tired of being low income and even having a child to claim with our family of 3 and income of only 40,000 we paid in over $4,000 in federal taxes out of our paychecks and still owed the IRS almost $500.00 and I already cannot afford to have more taken out of our paychecks so it would be really nice if the standard deduction was higher and this plan that Trump has might help us cause we all work full time jobs here at my house but live in a lower income area and its not right that people who barely work get huge tax returns while those of us that work and pay in still end up owing money.
I think there was something wrong with your calculation. My total income is about 16K more than yours, but I have never paid that much in federal taxes.
I’m sorry but you don’t know what you’re talking about. If you made 40k as a couple that would put you in the 10% bracket. If you had 4k in federal taken out you would get a refund, since there are deductions from the 40k you aren’t taxed on. If you have a kid the refund would be even larger as you would qualify for eitc.
Crystal if you made 40000. and paid 4500 in taxes you should love this plan..not counting any children related deductions take the 40000 you made subtract 24000 deduction for just you and your spouse
you are now taxed on 16000 with no other deduction your tax bill should be 1920. But you do have more deductions a child interest on a mortgage and any contributions after these deductions are also subtracted you may not pay but hundreds not thousands
We are in the 10% group and the proposed tax reform will more than double our tax liability.
I am expecting my taxes to go up. I am single and my itemizations were > $25K last year so the new standard deduction for a single doesn’t help. So I lose many deductions and the personal exemption. I voted for Trump but unless that 10% tax bracket covers a large range of incomes, I’m in deep doo-doo.
I don’t know what deductions you had but I’d get advice from an H&R Block. The tax analysts have lots of experience and will undergo extensive training. They might find ways to help you.
Why is retirement income considered “unearned income” and why do I have to pay taxes on it? The IRS counts this as income, but not earned income, therefore no earned income tax credit. Obviously the retirement income was earned. It wasn’t given to me, I earned it.
This is only to make the rich richer and the poor poorer!!! I like most sinlge mothers that barely make 24,000 a year look forward to taxes to catch up on past due bills… and now Trump sets it up to where the poor has to pay more and the rich pays less!!! How does that make sense?? Trump is leading the rich to better things and the poor to live on the streets!!! TRUMP IS RUINING AMERICA ALREADY!!!!
What do you mean that you use taxes to catch up on bills? Under Trumps plan, you would barely pay $1000 a year in taxes!!! I think you meant to say that you get money back from the Government instead of paying in. This is what is wrong with our country, everyone with their hands out looking up wanting something for free.
What she means is she gets free money every tax season. Credits under Obama tax plans which could add up to $5-10K “refund” depending on if she has kids. FREE MONEY to her. This isn’t a refund its just a hand out. A refund is a return of what you pay. This is just gift money. A tax burden to us. THIS is what needs to stop.
You do know earned-income taxes are not legally required right? Business and unearned income are required while earned is voluntary according to the IRS rules. The payouts are simply a way to get more people to file in hopes of them finding they owe. It is all a scam from both sides.
From what I understand you would only be taxed on $11,000 of that $24,000. You would be taxed at 12%. That’s less than what Hillary Clinton and Bernie Sanders proposed. As for someone wanting to pay more you can still do that via w4.
what will happen to the disability benefits under his plan. Right now disabled people get $25K off income because of the low income received by social security. Does this plan go away with Trump? If put in higher bracket with no deduction for disability it will be devastating for all disabled.
Dont forget you might pay a slightly higher tax % if your in the lower or middle income brackets but your standard tax deduction will go up to $15000 single and $30000 married couples. Helping to offset the slightly higher taxes.
I would go up from 18 percent to 25 tax. Income from married joint filing is to large a gap. 75000 to 225000 pay 25 % so i make $80000 and now will go from 15 to 25% this is no savings for midde income people. The poorest people pay more 12 instead of 10% and rich comes dow from 39 to 33% we need 75000 to 150000 for middle income rste of 17 or 18
Most people don’t understand how graded tax brackets work. In Teresa’s case, the first 75k would be taxed at the proposed 10-12% (instead of the current 15%) and she will only pay 25% tax on the amount above $75k. This should be way offset by the lower tax rate on the <75k income and the proposed double standard deduction.
Not to mention it looks like nothing will be owed on the 1st 13,000/24,000 and you still get to take your standard deduction of 15,000/30,000. Teresa would only owe 10-12% on dollars 24,001-50,000. Big difference if I’m reading it right.
Matt, I am not understanding it your way. They are eliminating the PE (personal exemptions) thus there are only the deductions left to take. If you don’t have more than their standard than you usually take the standard. The first $13,000/24000 is the amount they are saying you are not taxed on because this amount is the standard deduction. In her case she would pay 10-12% on the excess of either 13 – 15 k. Thus, if she makes 24k and the standard deduction is 13k she will pay 12% on 11k of her income in the new plan. Under her current plan she would only pay 10% on difference…
Jacob2, you are the idiot if you think that Trump is the best option for President. He could care less about you are anyone that is not increasing his personal revenue. People like you, is just like him, because of the ignorant shit that comes out of his mouth on a daily basis. If you are a person who like war and confusion among the american people then join the military and fight! because that is were he is taking this country. He could give a damn about you!!!!
Go figure. More name calling.
You are a dumb liberal! He didn’t have to run but wants to save this country before we look like Venezuela , that’s called socialism!
I think as a working class person myself, I personally am sick and tired of paying for lowlife s and deadbeat and lazy people that’s able to work, I’m also sick of thsee young kids and adults taking advantage of the government but really the government is giving them everything and not the working class people, I think we should get a stimulus package . We deserve something, I for 1 am sick of going to work everyday dealing with bullshit and idiots but guess what , I have morals and bills to pay for, I’m sick of being taxed every week out of my check and also taxed the hell out of on my income taxes, you have money Mr trump so if you going to do something stand up and be a real man and give us working class people something and also let’s tax people by what their income is , how about that. Thank you
Thank you Amy.I feel the same way
Wow Alex. Everyone said that Obama would do the same thing. But did he? No. Everyone said give Obama a chance before we passed judgment. I did. I waited a full 4 years before I talked crap about him and his policies. Now I use your parties own words on you. “Give him 4 years to see what he can do before you pass judgment.” You can’t have your cake and eat it too.
Alex, get an education and a job dude!…
Funny how Trump keeps talking about cutting taxes and simplifying the system. How about he releases his taxes as well to show how much he has profited (or avoided paying taxes) from the current tax system. Definitely need to simplify things, but Trump will just make the system better for the richest based on this plans. And who will pay for all these tax cuts? Just assuming that growth will offset the lower tax revenue is NOT a realistic plan. Its like saying I can keep spending more because I assume I will earn more forever.
Really I make an small 16000 and under his plan only a thousand will be taxed at twelve percent do your research and quit whining about him not releasing his taxes Boohoo nobody gives a crap what about hitlery erasing he Clinton foundation emails that showed she had 20% of her campaign funded buy the Saudi Arabians who mutilate female genitals for even looking at another man and hurl homos off the roof of the highest building yeah she’s the perfect one for the white house I say…Trump!
jacob, so sorry to hear the twisted, hateful thoughts coming from your mind. trump and hitler are more similar than anyone else in american history. he is the only person that says “only he” can save us, this on top of him having very little knowledge of how things work in government anyway. not sure why you are so angry at hillary. of course she has contributions from people you may not approve of, do you really think all saudis are the same? just look at how divided we are.
Trump and Hitler the same?? I’m sorry you feel that way but I 100% disagree.Hitler was a murder and a racist that killed thousands of men women and Children by burning them alive and putting them in gas chambers just to watch them suffer .You should be ashamed of yourself to compare anyone with Hitler SHAME ON YOU! You may not like trump and that is fine but a lot of ppl do like him and support him, it takes an evil hearted person to hurt or to kill or even support someone hurting an innocent Child and that is the main reason I stand behind Trump bc he hates abortion just as much as I do and he wouldn’t ever hurt something so innocent.So read ur facts before you compare someone to Hitler.God Bless
Jacob, You are one ignorant twit. Playing the Clinton card is old as hell. Give it up.
But it was ok for Obama to blame Bush for 8 years?
Any thoughts given to eliminate tax on social security?
Join the discussion
With this tax structure he will spend more time remembering his rich friends and associates than the low-earning voters who made him their president.
You can’t lower taxes on people who currently pay little to no taxes. My taxes will probably not go down but I am more concerned about jobs creation than lowering my taxes. Earning a higher salary is much more rewarding then sitting around hoping the government gives me a little of my money back. I did not vote for Trump to pay lower taxes. I voted for Trump for job creation, fighting terrorism, reversing the racial divide created by Obama, not being politically correct, immigration, and mostly because he is not a bureaucrat who gets rich off lobbyists and tax payers. Trump’s tax plan is all about creating jobs. He is had major tax increases for hedge fund managers and is taking away deductions on the rich. His new tax brackets will help small business owners who create jobs and innovations. Obviously business people like Trump’s tax plan.
Obama created a racial divide? Because all the different races along fine before he came along?
You been hosed, eh?
I’m uncertain about the job creation aspect. The idea is that injecting a lot of capital into the market will spur growth and hiring. But the thing is…we’ve already done that for the past 8 years. The Fed has pumped trillions in printed money into the market and…growth has remained unchanged.
I like the 15% corporate tax. That should help. But I think both you and Trump are overestimating just how much growth can be gained from capital injection.
And if the “yuge” growth doesn’t happen as brilliantly planned (it’d have to be 10-12%/year as estimated by tax analysts), the deficit will increase significantly. While that’s not a big problem in and of itself, I suspect a lot of Republicans in Congress won’t like that and likely gridlock government yet again just like they did under Obama.
Any talk about when trump takes over. A tax rebate sent out like bush did at first.
He doesn’t talk about a rebate – but there may be some sort of 2017 or 2018 economic stimulus, Specific to taxes, this is what he said in his contract to American pledge (Middle Class Tax Relief and Simplification Act)
“An economic plan designed to grow the economy 4% per year and create at least 25 million new jobs through massive tax reduction and simplification, in combination with trade reform, regulatory relief and lifting the restrictions on American energy. The largest tax reductions are for the middle class. A middle-class family with two children will get a 35% tax cut. The current number of brackets will be reduced from seven to three, and tax forms will likewise be greatly simplified. The business rate will be lowered from 35% to 15%, and the trillions of dollars of American corporate money overseas can now be brought back at a 10% rate”