- December 6, 2017
- Posted by: Boxelder Consulting
- Category: Taxes
How the tax overhaul could affect your bottom line
The Senate passed a long-awaited tax overhaul bill early Saturday morning. The bill, the biggest rewrite of the individual and corporate tax code in 30 years, would affect the pocketbooks of most Americans. It still has to be reconciled with a tax overhaul passed by the House last month before being sent to President Trump for his signature.
How the bill will affect your pocketbook will depend on many factors. And the impact could change over time, since the individual tax code provisions expire at the end of 2025.
What could cause my tax rate to increase?
People who itemize their deductions — and particularly those who deduct a significant amount from their taxable income — are more likely to pay more. (About a third of household itemizes deductions, like the mortgage interest deduction, and the vast majority of people earning more than $100,000 do.)
People in high-tax states may be particularly affected. While the Senate bill limits or does away with many deductions, the most significant loss is the deduction for state and local taxes. The Senate bill only retains a deduction for up to $10,000 in property taxes, so people who pay high levels of state and local income tax will be hit. Notably, the mortgage interest deduction and charitable deduction are preserved.
Singles are more likely to pay more than families with children because the bill gives bigger tax breaks for families with kids.
How every income group is affected in 2019, compared to current law
At the end of 2025, all the tax breaks for individuals and families will go away, leading many low- and middle-income taxpayers to see a tax increase. That’s because the bill adopts a less generous formula for calculating inflation, which means people will move into higher tax brackets faster. The corporate tax cuts will be unaffected.
How every income group is affected in 2027, compared to current law
Original Article: https://www.washingtonpost.com/graphics/2017/business/what-republican-tax-plans-could-mean-for-you/
By Reuben Fischer-Baum, Kim Soffen and Heather Long