Tax reform is at the forefront of the nation’s mind as we rush headlong into the height of the holiday season.
Both the House and Senate are expected to vote on the GOP tax bill today before sending it off to President Trump by December 20. Just one stroke of President Trump’s pen will reshape your tax situation for years to come.
While Republicans are anticipating their first major legislative win in the waning days of 2017, the American people aren’t uniformly behind the tax code changes being sought.
That said, any new tax law will impact us all regardless of our political persuasion!
Taxes: Take a look under the hood
Here’s an overview of the major provisions that are expected to make the final cut in the Tax Cuts and Jobs Act.
- Solidifies seven tax brackets — 10%, 12%, 22%, 24%, 32%, 35%, 37% — with the highest of them down from 39.6%
- Increases the standard deduction from $12,700 to $24,000 for joint returns and from $6,350 to $12,000 for individuals
- Prefer to itemize in lieu of the standard deduction? Your state and local tax deduction will be capped at $10,000 combined
- Mortgage interest deduction capped at $750,000
- Expands the Child Tax Credit from $1,000 to $2,000 and makes it refundable up to $1,400
- Retains popular deductions on student loans, medical expenses and charitable giving
- Raises the threshold for inheritances that are subject to the estate tax
- Preserves the adoption tax credit
- Repeals the individual mandate requiring health insurance
- Lowers the corporate rate from 35% to 21% starting in 2018
- Eliminates the corporate alternative minimum tax
- Sets the pass-through deduction rate at 20% for the first $315,000 of joint income (for small businesses)
Now, let’s bring it back to you…
We know that all the political back and forth can be exhausting and may even cause you to tune out.
Thankfully, there’s a new tool that lets you enter real-life numbers to quantify the impact the new tax code could have on you starting next year.
MarketWatch has created the “Trump tax calculator” to give you a look into the future.
You begin by entering your salary, marriage status, number of children and five other fields. In just a few second, this calculator lets you know how what’s being called the “biggest tax cut in history” will impact you in the first year after its enactment.
But here’s an important reminder: The numbers are only estimates! Since every taxpayer has a different situation, the calculator can’t provide an exact figure.