How does Trump’s new tax plan affect you?
As many people know, recently, on December 22, 2017, President Trump signed into a new tax plan. This plan will drop income tax for average American earners from the 25% bracket to the 22% bracket, repeal the current corporate tax rate of 35%, drop the top earner tax rate to 37%, increase the standard deduction, along with big changes to state and local deductions.
What changes will be made to personal income tax?
As you can see below, each tax bracket will see temporary changes except for the lowest income bracket which stays at a 10% tax rate. Each bracket will see a 2-5% decrease. To find out which tax bracket you are in, look at the second graph below on the chart labeled: Trump’s Income Tax Brackets.
| The TAX YEAR 2017 FEDERAL INCOME TAX BRACKETS | ||
| Single Filers | Married Filing Jointly | Tax Rate |
| $0 – $9,325 | $0 – $18,650 | 10% |
| $9,326 – $37,950 | $18,651 – $75,900 | 15% |
| $37,951 – $91,900 | $75,901 – $153,100 | 25% |
| $91,901 – $191,650 | $153,101 – $233,350 | 28% |
| $191,651 – $416,700 | $233,351 – $416,700 | 33% |
| $416,701 – $418,400 | $416,701 – $470,700 | 35% |
| $418,401+ | $470,701+ | 39.6% |
| TRUMP’S INCOME TAX BRACKETS | ||
| Single Filers | Married Filing Jointly | Tax Rate |
| $0 – $9,525 | $0 – $19,050 | 10% |
| $9,526 – $38,700 | $19,051 – $77,400 | 12% |
| $38,701 – $82,500 | $77,401 – $165,000 | 22% |
| $82,501 – $157,500 | $165,001 – $315,000 | 24% |
| $157,501 – $200,000 | $315,001 – $400,000 | 32% |
| $200,001 – $500,000 | $400,001 – $600,000 | 35% |
| $500,001+ | $600,001+ | 37% |
How does the current corporate tax change?
The corporate tax law will create one, a single rate of 21% starting this year. While the personal income tax is temporary, this change is permanent. This change will be a deduction for over 14% for corporations, which will be the lowest corporate tax rate since 1939.
How much do the current standard deductions increase?
The standard deductions will be raised to 20% to pass-through businesses. Additionally, for married couples filing jointly, the standard deduction will be raised to $24,000.00 and $12,000.00 for single filers. These changes are temporary and are set to expire in 2025.
What changes have been made to state and local deductions?
The new tax plan has reduced the SALT (state and local tax deductions) Taxpayers will now have the opportunity of a $10,000 state and local tax deduction. This deduction can be applied to local property and income taxes.
Talk to an Attorney today!
Our goal was to provide a synopsis of the current tax plan that has been implemented this year. We have tried to highlight the major changes. There are a number of more changes that will be implemented this year as well. We can answer any legal questions you may have. Call today to talk to one of our experienced Attorneys.