MoneyTalk

Trump’s Tax Reform: Are You Better Off?

Donald Trump

Revised

GOP Tax Plan Finalized

With the GOP tax bill out of the conference process, a vote for the bill will likely be held early next week. With no more further changes to be made, Americans can now decide if it really will be the Christmas gift President Trump has promised to taxpayers. What we do know is that big business is definitely feeling the love this holiday season with the corporate tax rate dropping from 35% to 21%. But how do the rest of us fare?

Here are the new rates and brackets:

Joint Filers:

  • 10% – $0-$19,050
  • 12% – $19,050 -$77,400
  • 22% – $77,400 – $165,000
  • 24% – $165,000 – $315,000
  • 32% – $315,000 – $400,000
  • 35% – $400,000 – $600,000
  • 37% – $600,000 and above

Single Filers:

  • 10% – $0 – $9,525
  • 12% – $9,525 – $38,700
  • 22% – $38,700 – $70,000
  • 24% – $70,000 – $160,000
  • 32% – $160,000 – $200,000
  • 35% – $200,000- $500,000
  • 37% – $500,000 – and above

How Will the GOP Tax Bill Impact You?

With the drop in rates on taxable income, its reasonable to assume most taxpayers will have a modest tax break. However, that is yet to be determined by the new income brackets. With exemptions gone and the significant increase of the standard deduction – from the $6,350 up to $12,000 for single filers and nearly doubling the standard of married couples to $24,000 – it is probable that most taxpayers will decide not to itemize.

The bill may not be a tax break for those that usually rely on substantial deductions for tax relief and the substantial exemptions that have now vanished. Without exemptions, tax payers will weigh whether their deductions will be high enough to benefit from itemizing their taxes, or whether they should take the standard deduction. The bill will now cap state, local, and property tax at $10,000. Mortgage interest can be deducted on mortgages up to $750,000 and medical expenses will continue to be deductible.

All tax filers with eligible children will be relieved to know that the $2,000 child tax credit made it to the final bill with $1,400 being potentially refundable. This credit extends to children under 17 years of age.

And what about small business? Owners who are setup as S-corps or LLC and receive pass-through income will be allowed to deduct 20% of their pass-through income prior to applying the personal income tax rate. The Alternative Minimum Tax (AMT) will still apply to those making one million and above.

The GOP tax bill also gets rid of Obamacare’s individual mandate. This is most likely due to the failure of the GOP to repair and replace the Affordable Care Act this legislative session.

With final votes expected next week, you can find out if you are better off with Trump’s tax plan by using our Trump tax reform calculator. For comparison, and if you interested in knowing what your taxes might be this year (2017), then use our 2017 tax calculator.

 

 

49 comments on “Trump’s Tax Reform: Are You Better Off?”

  1. Chris says:

    November 2nd, 2017 at 10:50 pm (#)

    As a small business owner, I’m not sure I’ll be better off. Due to my income level, I already don’t qualify for the child tax credits and now, if I lose my personal exemptions, I may be paying more taxes under this plan. Even if I get some tax savings, I know they will be completely wiped out by the 16% increase in health insurance premiums for me and all my employees due to the “affordable” care act. Rob from Peter to pay Paul! Somebody in Washington needs to look out for the small business owners, we are dying out here!

  2. Trish says:

    November 3rd, 2017 at 1:05 am (#)

    We are a small business owner as well and comparing last years taxes. We don’t think we’d be better off. Its a little confusing as we are looking at Business Taxes as well as Personal, however it looks as if we will be paying more tax. I thought this was supposed to help the small business owner. WTH

  3. Reformnotreally reform says:

    November 3rd, 2017 at 2:11 am (#)

    I ran the numbers and will be paying more – I am married no kids and now lose personal exemption. I am not a happy

  4. kevin says:

    November 3rd, 2017 at 2:31 am (#)

    Typical, small business and small farmers are going to perish under this plan. Big Corporation will thrive. The middle class will pay more taxes than the rich. Again, middle class will have the burden of carrying the majority of the taxes placed on their shoulders. 🙁

  5. WalterWhite says:

    November 3rd, 2017 at 2:14 pm (#)

    Salaried (W-2) person here, looks like my tax has gone down. Would like to see a more detailed calculator that considers the state (I am from NJ), and local taxes, and their deductions etc.

  6. Becky says:

    November 3rd, 2017 at 4:31 pm (#)

    Unfortunately state income and sales tax will no longer be deductible. Only state and local property taxes capped at $10,000.

  7. Money Help Center says:

    November 16th, 2017 at 9:29 pm (#)

    Unfortunately, the House version repeals the deduction for state and local income taxes (SALT) paid and limits property tax deduction to $10,000. For high tax states such as New Jersey you will lose your state tax deduction which may be significant. In essence you are now paying a tax on a tax.

  8. Dan says:

    November 3rd, 2017 at 3:35 pm (#)

    I am a CPA, and I have read part of the bill. The changes are vast to the tax code. Someone commented above about losing child credits. The good news is that the phase-out increases from 110K to $230K as I read it. The bad news for small businesses is what the bill does to self-employment income. S Corporation owners are going to get crucified. A portion, or possibly all, of your taxable profit is going to be thrown into self-employment earnings. That is an extra 15.3% tax on that money. Yup. That is in the bill. Look it up. Search the bill for section 1402(a). That is the self-employment income definition section. They are radically changing it. ANY SMALL BUSINESS OWNER THAT SWITCHED TO AN S-CORP TO AVOID THIS TAX IS IN FOR AN AWAKENING. This is bad.

  9. Becky says:

    November 3rd, 2017 at 4:33 pm (#)

    Wow! That would make things even worse if those owner distributions will now be subject to FICA.

  10. Money Help Center says:

    November 16th, 2017 at 9:34 pm (#)

    Yes, it would make it worse. Still looking for clarification on this.

  11. Richard Davis says:

    November 3rd, 2017 at 3:57 pm (#)

    My wife and I are both over 65, retired, only income is from Social Security and pensions. Our taxes will go up 154% in 2018, due to losing the deduction for out of pocket medical expenses. My wife is in long term nursing home care with Alzheimer’s disease. My out of pocket costs for her nursing home care and prescription drugs in 2018 will be $99,000. Without that deduction (less the 10% of our AGI) our combined federal and state taxes will increase 154%.

  12. Money Help Center says:

    November 16th, 2017 at 9:33 pm (#)

    There is discussion in the Senate version about keeping the medical deduction, but that is not what passed in the House.

  13. Doug says:

    November 4th, 2017 at 12:23 am (#)

    Ditto Chris. And it’s not just rising health care costs, so-called tax cuts but also minimum wage hikes. Today, I just spoke with the Chamber of Commerce President in Queen Creek, Arizona today. He said that because the minimum wage tax increase passed by voters in Arizona last year, there are fewer minimum wage jobs and struggling business owners are finding it hard to make payroll. Consider what small business means to America. Why punish them?

    Small businesses make up-

    -99.7 percent of U.S. employer rms, 64 percent of net new private-sectorjobs,
    -49.2 percent of private-sectoremployment,
    -42.9 percent of private-sector payroll, 46 percent of private-sector output, 43 percent of high-tech employment, 98 percent of rms exporting goods, and
    -33 percent of exporting value

    (Stats from the Small Business Administration)

  14. John says:

    November 4th, 2017 at 10:52 am (#)

    Ok the standard deduction goes up to $24000……but you lose the personal deduction…. and I dont see anywhere that persons over 65 get the additions deduction for being older…… anyone have any insite…..

  15. Dave says:

    November 4th, 2017 at 12:24 pm (#)

    Wow!!! We are retired living in a blue state. We have high medical expenses and contribute to charities. According to this calculator our taxes will increase by more than $5000. THANK YOU REPUBLICANS FOR OUR MIDDLE CLASS TAX CUT.

  16. Billy says:

    November 4th, 2017 at 3:12 pm (#)

    From what I can tell I’ll be screwed under this tax reduction bill? And I voted for these wackos. Thanks a lot.

  17. DA says:

    November 4th, 2017 at 4:58 pm (#)

    Both my husband are over 65, we are retired and have our Social Security, IRA, and savings to live on. After calculating the new tax proposals our 2016 tax would have gone up 98%, and approx 63% for 2015. Due to the loss of personal exemptions and the increase in the tax brackets. We do not itemize.

  18. Joanna says:

    November 4th, 2017 at 5:09 pm (#)

    Well,

    I just ran this for my husband and I. I live in the Bay Area and have high real estate and income taxes, and we are both retiring next year. It looks like our taxes will be going up $3000-4000. Oh, and did our decent medical coverage surged over 30% this year. To all you that voted for these fools…. well, the joke is on you.

  19. Diane says:

    November 4th, 2017 at 11:37 pm (#)

    Many people who have itemized deductions in the past will be hurt. With the $10,000 cap on Property taxes, you have to have $14,000 interest and/or charitable contributions to benefit from itemizing under the proposed “reform”. My taxes would go up about $2,000 under this proposal – all from the loss of itemized deductions.

  20. Bewick Finzer says:

    November 5th, 2017 at 5:33 pm (#)

    My wife and I are retired 72 and 67. My tax ill is going up almost 30% I have no pension only Ira ,wife small pension. We have paid taxes since we wer 16 and started working about 50 years. Its like we are getting penalized by our income. I voted for President Trump but now Im not to happy that it will cost us much more in taxes. There are many older retired people in the same boat as us and they are really mad at the amount we will have to pay! I dont mind paying taxes at all but didnt expect to go up by 30 percent! If this passes I dont think many republicans or Mr Trump wil be in office next term.Senior voting block is huge.

  21. Larry G says:

    November 6th, 2017 at 12:46 am (#)

    Wife and I retired , 70 years old…living on SSI, pension and suplementing with IRA funds.Taking medical exemption away, property tax limit personal exemption eliminated….taxes going up 20%. Do the math…..standard deduction is really only $16,000 …….if personal exemption of 8,000 removed
    Consider myself middleclass……if Washington wants us to have a reduction in taxes why not just drop the bracket percent accross the board .I think the middleclass will be subsidizing the corporate tax reduction.

  22. ROBERT MCROBBIE says:

    November 6th, 2017 at 3:25 pm (#)

    I am over 65 income is Social Security for self and wife and pensions. We currently itemize-according to this calculator our taxes will go up $48 by taking the standard deduction. Worth it to us if this means a simple form to fill out rather than hours of work. My only hope is that the plan does improve the economy

  23. Money Help Center says:

    November 7th, 2017 at 12:34 am (#)

    We agree with your sentiments. It looks like this bill could really do some harm to those relying on deductions and the exemptions to lower their tax liability. We will see how the Senate calculates this with their version of the tax reform calculator coming out this week.

  24. Ruchi Chakrabarty says:

    November 7th, 2017 at 1:30 am (#)

    Both of us are retired and in our 70’s,taking RMD (Required minimum distribution). Our income is from social security benefits and RMD.
    Under this new GOP/Trump plan our standard deduction goes to $24,000 from $12,700. but we are losing $4,050/person for personal exemption and also $1,250/person extra deduction as we are 65 and over.

    Old deduction = 12,700+ 1,250*2 + 4,050*2 = $23,300
    New deduction = $24,000
    We are getting additional deduction of 24,000 – 23,300 = $700. If we take 25% of this it will be = $175
    Question : under this new plan how they are going to tax our S.S benefits?
    Under old/existing plan S S benefits are taxed from 0% to a maximum of 85 % (depending on your income level).
    Another thing: we have been taking $3,000 deduction for capital loss carry over from 1990s, what happens to this deduction?

  25. Money Help Center says:

    November 16th, 2017 at 10:04 pm (#)

    It doesn’t appear that they address the taxes on SS benefits in the Brady (House) bill
    So my assumption is taxes on SS benefits will remain the same – either 50% or 85% of SS benefits will still be included in taxable income. Here is a calculator to help determine the amount taxable for 2017.

  26. Morgan says:

    November 7th, 2017 at 5:10 am (#)

    1040 lines 7 – 22 are for income types. Is line 12 business income the only line to be taxed at 20% from dollar one? Or is line 7 wages the only one taxed at 12% from dollar one? How will all other income types be taxed?

    Also, can the standard deduction can only be deducted from wage income? Small business will be charged 20% and don’t get deductions when they used to start at 10% after exemptions and deductions.

    Short UBER.

  27. John Walters says:

    November 7th, 2017 at 9:55 pm (#)

    Speaker Ryan’s post card tax filer taxes my pension + social Security same as a younger working person’s W2 regular income tax. This pushes my current 10% effective tax rate into new 25% bracket.
    President Trump is clawing back income from retired Americans…destroys our life long retirement plan.
    WE STILL VOTE
    THIS WILL END GOP PARTY

  28. Kevo says:

    November 8th, 2017 at 8:27 pm (#)

    Not sure it the republicans understand taxes or maybe they dont do their own. I am married with 4 kids. Yeah there are a few more credits. Unfortunately, they dont help me. Because I lose $24,000 worth of personal exemptions and $5,000 worth of state sales tax (California) that I can no longer deduct, my taxable income increases $30,000 which the new tax brackets and credits do not offset. This plan is a disaster for the real middle class…working families with 2 or more kids!!!!

  29. Money Help Center says:

    November 16th, 2017 at 10:07 pm (#)

    Yes it appears that those with large families and in high income tax states will not benefit from this tax plan.

  30. Michael O'Hara says:

    November 12th, 2017 at 1:14 pm (#)

    So it seems that most of the people against this plan are retired people who lose the itemized medical deduction. The new Senate plan resolves this.

    The other group of people that get hurt are people who have children still living at home and are either over 18 or are still in college over 24 and do not provide more than half their own support. I am not sympathetic that you lose the personal exemption because your children are not independent. I am tired of my tax dollars supporting “children” who are not responsible enough to have their own health insurance and live on their own all the way up to age 26.

    The Money Help Center analysis is wrong. The people that will not benefit from this plan are people living in high tax states with many adult children still living at home.

    The new Senate plan rectifies the bad decision by the House eliminating the important medical expense deduction which addresses most of the grievances above.

  31. Susu says:

    November 14th, 2017 at 12:44 pm (#)

    Unfortunately, as a widow trying to live on just my own 65,0000 earnings, I will lose about 200 per month that I cannot afford to do. Texas has very high property taxes at approx. 3%, so this already takes a huge bite out of my budget. I’m very concerned that I will be in financial hurt if I retire next year as I have never had enough extra to do a 401k plan. Ps – I did vote Republican

  32. jack white says:

    November 15th, 2017 at 4:37 am (#)

    THE ALLOWABLE DEDUCTIONS ARE NOT CLEAR WITH THIS PLAN. TRADITIONALLY MY MAJOR
    DEDUCTIONS ARE MEDICAL, REAL ESTATE TAXES, CONRIBUTIONS, STATE SALES TAXES, CASUALTY
    OR THEFT LOSSES, AND OTHER EXPENSES E.G. INVESTMENT EXPENSES. IF ANY OF THESE DEDUCTIONS
    ARE NOT ALLOWED—THEN MY TAXES WILL DRAMATICALLY INCREASE WITH THIS NEW GOP TAX
    PLAN !!! EVEN IF I AM ALLOWED A $10,000 REAL ESTATE DEDUCTION MY TAXES WILL STILL GO UP.

    CAN SOMEBODY LET ME KNOW IF THE MAJOR DEDUCTIONS I HAVE LISTED WILL BE ALLOWED
    IN THS NEW GOP TAX PLAN INCLUDING THE $10,000 REAL ESTATE DEDUCTIION. IF THESE ARE NOT
    ALLOWED 0THEN MY TAXES WILL GO UP DRAMATICALLY. I AM A MIDDLE CLASS SENIOR WHERE MY
    INCOME IS PRIMARILY MADE UP OF SO-SEC 28K, RMD 72K, PENSION 1K, DIVIDENDS 1K WAGES ZERO.
    MY CURRENT FEDERAL CURRENT DEDUCTIONS ARE $32K ANY FEDERAL TAXES ARE $8K. SO IF MY
    CURRENT ALLOWED DEDUCTIONS ARE LOWERED BY THE NEW GOP TAX PLAN–I WILL BE IN TROUBLE ECONOMICALLY! HOPEFULLY MY DEDUCTIONS WILL BE ALLOWED IN THE GOP PLAN!!!

    8

  33. Money Help Center says:

    November 16th, 2017 at 10:15 pm (#)

    Unfortunately, the House (GOP plan) repeals many of the current deductions such as state income tax and medical expense deductions. Here is a link to the bill so you can search for other allowed deductions.

  34. Darlene Foster says:

    November 16th, 2017 at 3:49 pm (#)

    will current formula be used to calculate taxable social security income under proposed tax bill. If not all seniors are screwed.

  35. Shawn says:

    November 16th, 2017 at 7:39 pm (#)

    This will hurt badly!! We’ll be paying nearly $15,000 more in taxes. The most tragic piece is that we will now be DOUBLE TAXED. Since we live in a state (IL) with state income taxes and high property taxes, we’ll get to pay the state and then the federal government will come in and make us pay taxes on the money again! Our country is being irrevocably damaged.

  36. Eric says:

    November 16th, 2017 at 9:18 pm (#)

    Republicans *always* lower taxes for the rich and large corporations, and pay for it by increasing taxes on the lower- and middle-classes. It baffles me why people vote for these folks and then act surprised, since they do the same thing every time! Of course they always lie — e.g., “Read my lips: no new taxes” — and for some reason people believe the lies. Every time. Republicans exclusively care about the mega-rich.

    BTW: Mexico isn’t paying for the wall, but this tax increase on lower classes will help pay the bill for sure.

  37. Cindy says:

    November 17th, 2017 at 7:27 pm (#)

    Money Help Center, please make a calculator for the bill currently in the senate. The new taxes also target single mothers like me because head-of-household is now taxed just like a single person for most brackets.

  38. Money Help Center says:

    November 29th, 2017 at 6:30 pm (#)

    We are working on a calculator now and adding Senate revisions. Please read our updated article for more information about the Senate bill.

  39. Chris says:

    November 18th, 2017 at 6:26 pm (#)

    I see a lot of consternation from those who probably didn’t vote GOP anyway, who live in high tax states, probably voted for all the giveaways and fiscally irresposible programs in those states, and who are now complaining about losing those deductions that are subsidised by those of us in free states. House plan saves me $6k, Senate $10k. Wife stays home with kids since if she worked, after funding her 401k, she’d bring home $.50 on the dollar. So fair – ”progressive,” er, regressive system? It’s so rewarding going to work a third of the year knowing that my take home is $.60 of every dollar I earn. House almost paid off and get AMT’d every year anyways so all those itemized deductions disappear anyways. I get by well, but you know what, I earned it, so yeah, I’d like to keep it.

  40. Ramsey says:

    November 28th, 2017 at 12:17 pm (#)

    I have one word……ALIMONY. I will be completely screwed.

  41. Ray says:

    November 29th, 2017 at 8:20 am (#)

    I have very high healthcare expenses due to my wife have a chronic illness. I am going to get royally screwed in this new plan. My main deductions are about 70% medical and 30% SALT. The house bill gets rid of medical; the senate bill gets rid of SALT. Either way, I get it in the gut. When they raised my taxes due to Obamacare (they raised the floor from 8 to 10%), I wasn’t happy but was philosophical – it’s a contribution to the healthcare of the nation, so I was okay with doing my part for the country. However, in this case, my taxes are going up $4000 and for what? So Apple and Google can get billions of dollars when they have more cash than they know what to do with it? So who can blow up a debt load that already is out of control? I feel for the retirees who did everything right, planned for a lifetime, and in one month, are getting squashed. We’re the middle to upper middle class. We worked hard and through our own gumption, carved out a decent life for ourselves. But we’re stuck – we make too much money to get any benefits and we’re not secure enough that we don’t have to worry. I live in a red state and have contacted my congressman and they’re still voting for it. More than half the country doesn’t want this. We don’t live in a swamp – this is a dictatorship that doesn’t care about the will of the people.

  42. Money Help Center says:

    November 29th, 2017 at 6:28 pm (#)

    We are working on a calculator for the Senate tax plan. In the meantime, we have updated our article to give information about both the House and Senate tax plans.

  43. Kyle Kossick says:

    November 30th, 2017 at 5:42 pm (#)

    Someone’s gotta pay that 20 trillion deficit. We all need to chip in.

  44. Alan Weatherly says:

    November 30th, 2017 at 9:44 pm (#)

    My wife and myself are seniors over 65. With the loss of the individual exemption and senior standard deduction it looks like we will pay more tax. We are not happy at all. Especially since we live on a fixed income. How can this called the greatest tax reform in history to benefit the middle class. Politicians being millionaires already cannot be expected to give us relief. They can only enact laws to take so they can further enrich themselves.

  45. Phillip says:

    December 2nd, 2017 at 6:06 am (#)

    I’m married filing jointly our children are grown. This tax plan is revolting. We will pay more as I see it instead of paying less. Since our President continuously touts this as the greatest savings for the middle class in history it’s really a bait and switch scheme. It’s better than even one Charles Ponzi could concoct. If citizens in the working middle class, elderly , or retired with less than 200,000 dollars of income per individual pays one dollar more in taxes than you currently pay you don’t realize the contrived plan to further burden us. If the masses must pay more – then the rich should be equally taxed in their income and be made to give up shielded income such as shared interest and other niceties afforded to them. How is allowing corporations and the multi-millionaires saving in taxes helping the middle class. Most don’t take salaries. How is this group allowing them to pay less income tax helping the middle class? Oh! Build more plants here , employ more people. Corporations /businesses want more profits and only hire minimum workers they need, and pay them less today. Why do you think defined benefit plans are mostly a thing of the past. All I can say is if this passes it’s a sad day for us the so called middle class.

  46. Joan says:

    December 2nd, 2017 at 5:58 pm (#)

    I am retired widow, age 63. I itemize deductions for qualified medical expenses, state income tax and property tax. I also own rental real estate property, which up to now, offered attractive tax benefits. During the time we were working, my husband and I carefully organized our lives so that we could have enough income when we retire. We always voted Republican and always enjoyed the few tax reforms they passed. NOT THIS TIME! My taxes go up dramatically. And remember Democrats would never vote to reduce your taxes. We are now stuck with two parties who could care less about middle class people.

  47. Chris says:

    December 3rd, 2017 at 7:41 pm (#)

    Again, all I see is consternation. How about some of you complaining show your income; it’s all anonymous. Let’s break it down for all to see. Show everyone the gross, the deductions, the taxable and the ultimate, actual tax. Also, show your states and the local taxes; the SALT. Lets all see it all and then discuss what’s fair and what’s not.

  48. linda c says:

    December 8th, 2017 at 8:53 am (#)

    this new tax bill is going to hurt millions of senior citizens.. I alone will have to pay about 7000
    we are loosing the medical benifits. as well as our state and local tax deductions….
    shame on this administration that does not care about single people and seniors….
    this is not good for america….

  49. REBECCA GREER says:

    December 14th, 2017 at 7:06 am (#)

    You stated that we can “assume” that social security taxability will be using the current method. Half of mine is not taxable at present. No one will answer if all or only a percentage is taxable. Requests to my senators and representative on this subject go unanswered.

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