Tax Reform: Will You Pay MORE or LESS income tax?

[dado potato]

Americans were promised "Tax Reform" and "Lower Taxes".

As one bill was passed by the House of Representatives, and as another bill wends its way through the Senate, it looks as though changes will be passed into law. It is too early to know what all the exact changes in federal income tax will be, and when they will take effect (and when they will "sunset").

Some pundits are saying taxpayers with less than $75,000 income will pay higher taxes. I need to do some research and find out what that prediction is based on.

The Senate bill would eliminate the ACA (Obamacare) mandate. Without a mandate (penalty in the income taxes) more healthy people would choose to let health insurance lapse, or never buy it. So an indirect cost of this "reform" would be self-selection, whereby older and sicker individuals participate in the insurance risk pool, but healthier and younger individuals do not ... with the effect that higher insurance premiums will be charged for the same coverage by the insurers. And if the USA has a larger proportion of the population uninsured, it seems likely that more people will be impoverished by the costs of medical care.

As you good people figure out the net effects of the changes on your individual tax situation, I am wondering if anybody will be paying more or less. I am interested in the overall impact... I am not asking for any private or personal information.

[Teacher Terry]

As usual with the Repub's the middle class is going to get poorer while the rich get more tax breaks and get richer. I think we will be paying more.

[dado potato]

The House bill was 429 pages long.

I still need to research details, but I understand there would be 4 tax brackets instead of 6. Top (39.5%) marginal rate for joint filers would be applied to their taxable income in excess of $1,350,000. The bottom bracket tax rate, for joint filers with taxable income under $18,650 would increase from 10% to 12%.

Businesses' tax rates would go down permanently. The rate for pass-through businesses, such as LLCs, generally would drop from 39.5% to 25%. ( A boon for real estate investors. )
Corporations repatriating profits from abroad will be taxed at 12%. In future, multinational corporations will be taxed by the USA on profits made in the USA (a "territorial" tax system, rather than a global system).

Smaller independent businesses in which the owners make $150,000 or less per year can look forward to a 9% tax rate on the first $75,000... phasing in gradually to 2022.

Brackets for joint filers in the House bill:
12% ... 0-$90,000
25% .. $90,001 - $260,000
35% .. $260,001 - $1,000,000
39.5% $1,000,001 +

2017 Brackets for Joint Filers
10% ... $0 to $18,650 ... this group could be paying more if the reforms become law
15% ... $18,651 - $75,900
25% ... $75,901 - $153,100
28% ... $153,101 - $233,350
33% ... $233,351 - $416,700
35% ... $416,701 - $470,700
39.5% $470,701+

So it would appear that for joint filers:
Taxable Income from 0 to $18,650 would see the tax rate INCREASE from 10% to 12%
Taxable Income from $18,651 to $75,900 would see the marginal tax rate drop from 15% to 12%.
... from $75,901 to $90,000 would see the marginal tax rate drop from 25% to 12%
... from $153,101 to $233,350would see the marginal tax rate drop from 28% to 25%.
... from $233,351 to $260,000 would see the marginal tax rate drop from 33% to 25%.
... from $260,001 to $416,700 would see the marginal tax rate INCREASE from 33% to 35%.

The House bill increases the Standard Deduction for joint filers from $12,700 to $24,400 and it eliminates most personal exemptions.

All my figures are based on journalistic coverage. I stand to be corrected. I am not a tax professional. I would recommend anyone who wants to understand their tax situation should consult a competent tax professional.

[Teacher Terry]

The plan also calls for billions to be cut from Medicare. Great idea with so many baby boomers coming down the pipeline

[flowerseverywhere]

We have been reading and trying to figure this out. But from what we can deduce, our taxes will perhaps be a few hundred dollars lower or a wash. It is very hard to tell. We are almost at Medicare age so expect that cost to increase to probably offset any savings if there are some. Issues of the estate tax for estates 5 million+, child care credits and mortgage deductions elimination for mortagages over half a million will not effect us. Of course, I imagine some people could decrease charitable contributions if they are not deductible.

I inderstand that part of the bill repeals the individual health care mandate. I understand why the individual mandate is so controversia, but without it I cannot imagine our premiums won’t see a huge increase.

I’m still waiting for the Republican Congress, senate and White House to repeal and replace Obamacare with something that is better, covers more people and cost less like Donald promised over and over.

A tax bill that helps middle class people like me seems doubtful, however I don’t mind paying taxes so kids can attend school, there are police and fire departments, trash pick up and so on. All part of the deal.

Teacher Terry. cutting Medicare is truly making those that do so a death panel. Living in a big retirement community I know many people who worked their whole lives at decent jobs, are not extravagant, have one car and so on that simply have little extra money.

edited to correct Teacher Terror to Teacher Terry. Honestly...

[Teacher Terry]

I believe you) I have a few friends that live in low income senior housing after running out of $. Plus our rents are skyrocketing as are our housing prices.

[bae]

I can't tell yet.

[Williamsmith]

Americans were promised "Tax Reform" and "Lower Taxes".

As one bill was passed by the House of Representatives, and as another bill wends its way through the Senate, it looks as though changes will be passed into law. It is too early to know what all the exact changes in federal income tax will be, and when they will take effect (and when they will "sunset").

Some pundits are saying taxpayers with less than $75,000 income will pay higher taxes. I need to do some research and find out what that prediction is based on.

The Senate bill would eliminate the ACA (Obamacare) mandate. Without a mandate (penalty in the income taxes) more healthy people would choose to let health insurance lapse, or never buy it. So an indirect cost of this "reform" would be self-selection, whereby older and sicker individuals participate in the insurance risk pool, but healthier and younger individuals do not ... with the effect that higher insurance premiums will be charged for the same coverage by the insurers. And if the USA has a larger proportion of the population uninsured, it seems likely that more people will be impoverished by the costs of medical care.

As you good people figure out the net effects of the changes on your individual tax situation, I am wondering if anybody will be paying more or less. I am interested in the overall impact... I am not asking for any private or personal information.

I wont be paying more no matter how you slice it......I will see to that.

[dmc]

I’ll have to see what they pass before I can tell. I doubt if there will be much change for me.

[catherine]

These chart are pretty helpful in figuring it out.

https://www.nytimes.com/interactive/...plan.html?_r=0