Trump News: What Does the Trump Tax Bill Mean for Your Wallet (Infographic)

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It’s official – Congress passed the final version of the GOP tax bill for both businesses and individual Americans on Wednesday, December 20th. Now the biggest overhaul of the US tax code in 30 years is waiting for the President signature.

Nexter explains what does it mean for you and how to calculate your taxes now.

Key changes

“We are making America great again,” Trump said, echoing his campaign slogan at a White House celebration with Republican lawmakers. “Ultimately what does it mean? It means jobs, jobs, jobs, jobs.”

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AP

The bill reduces the corporate tax rate to 21% from 35%, and most Americans are likely to see a smaller tax bill, while the more limited tax cuts for the middle class expire in 2025.

According to the independent Tax Policy Centre more than 80% of the tax money will go to the top 1 %.

The impact to the economy

As many economists predict the US will see a boost in economy in the short-term as a result of new tax pill. Meantime most American taxpayers will see a cut of their taxes, but it depends on a variety of factors. You won’t see the changes immediately, it is expected the Americans will see a difference in their paychecks in early 2018.

Actually not all see the benefits of the new tax code. The Democrats believe tax plan will increase the U.S. national debt by at least $1 trillion over a decade.

“Yet again, Republicans showed their only priority is to give the richest few a bigger piece of the pie,” Senate minority Leader Chuck Schumer, a New York Democrat, tweeted. “I believe the entire Republican Party will come to rue the day they voted for the #GOPTaxScam.”

How the tax bill will affect your paycheck

According to BusinessInsider, “the Tax Policy Center estimated that the average American will get a tax cut of $1,610 in 2018 — and that every income bracket will get a tax cut. People in the middle quintile of earners would get a cut of $930 on average in 2018 and $910 by 2025. Overall, about 80% of people would see a tax cut in year one of the legislation, the center estimated.”

The TPC also claimed that wealthier Americans will get more benefits — 65.8% of the total federal tax benefit would to the top quintile of earners.

“What would these average tax cuts mean for American households? For middle-income people, an extra $900 would pay for about seven months of gas,” said Howard Gleckman, a senior fellow at the TPC. “By contrast, those in the top 1% could pick up a nice Mercedes C Class Coupe with their $50,000+ average tax cut.”

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How to Calculate new taxes now?

Many people misunderstand how taxes are actually calculated. Full list of changes and your bracket you will find here.

Here is a brief guide.

  • First of all, you need to figure out what your taxable income is. Take your salary and everything you earned, subtracting out any deductions that apply. For most people, that means taking the standard deduction. And then that leaves you with your taxable income.
  • Apply it to the tax brackets given here. As wee see, everybody pays 10% on their first $9,000 or so of income for single people, or $19,000 or so for married people, and then you move through the tax brackets until you end up in your final tax bracket.
  • If your bracket is at 25%, you only pay 25% in taxes on the income you earn that fits into that bracket.

For Millennials

The median weekly pay for people aged between 24 and 34 is $778, according to the Bureau of Labor Statistics. Over the course of a year that would amount to $40,456. At that income level, you’ll move from a 25% tax bracket to 22% once the new rates take effect, according to CNN.

If you don’t have a lot of deductions and usually take the standard deduction, there’s more good news here: the standard deduction would nearly double to $12,000, up from $6,500. That’s assuming you’re single. If you’re married, the standard deduction rises to $24,000.

For Businesses

Businesses will receive major benefits from the GOP tax bill — the biggest being a cut in the federal corporate tax rate to 21% from the current 35%.

Wall Street analysts expect a serious boost in profits.

Analysts at Cowen Research Group estimated that just Amazon, Google and Facebook will save $4.5 billion in taxes in 2018 under the new tax code.

Experts predict that the bill will increase company profits, give a small boost to the US economy, cut taxes for most Americans, and cause the federal deficit to balloon.

Actually you still have plenty of time to figure out how the new tax system is working. Nothing will really impact your taxes until you file your 2018 taxes in 2019.

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