With Republicans' passage of one of the most significant tax reform bills in decades, everyone is asking the same question: Will my taxes go up or down? Obviously, every tax return is different and generalities are difficult. Is a person's income from a job or investments? Are they itemizing or taking a new, much larger standard deduction?
Still, for individual tax filers whose main source of income is their paycheck, some preliminary estimates can be made.
Filers - Bill - Exceptions - Income - Spectrum
Generally speaking, most filers benefit from the bill, with exceptions across the income spectrum. As a guide to the bill, it is fair to say that the higher your income the more you're likely to benefit. Filers in the $250,000 to $750,000 range generally see the greatest increase in after-tax income. Those at the very bottom of the income spectrum will benefit less. At the same time, the bill is most likely to raise taxes on some high-income filers in states with high state and local taxes.
Another takeaway: Those claiming a child tax credit for dependents are much more likely to be winners in the bill. Much of the benefit to middle income earners comes from the doubling of the child tax credit and the standard deduction. The bill Congress is voting on will also make the child tax credit available to many more high-income earners. The credit also has a larger refundable portion, which will benefit some lower earners.
Doubling - Deduction - Loss - Limitation - Deductions
The doubling of the standard deduction and loss or limitation of some deductions will mean far fewer filers at all income levels will itemize. Those in the lower and middle income groups who itemized instead of taking the standard deduction are less likely to benefit from the bill.
The timeframe when considering the bill's impact on your paycheck makes a big difference in what you find. After 2025,...
(Excerpt) Read more at: CNN
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