The main goal of the Senate tax bill is to lower taxes on companies in an effort to make them more competitive. There are major changes elsewhere as well. What does this mean for you? This means that depending on where you live, how much you earn, and how you make your income, you might pay more or less than you do now. Thomas Cooke, a professor at Georgetown University says, “The bill has tax cuts across the board, but it also has increased taxes across the board…Every individual has to look at their own situation separately to decide if they benefit.” Here are some highlights from the bill and who it may affect most:
–It keeps the Affordable Care Act’s individual mandate
-Income Taxes: There will be four tax rates: 12%, 25%, 35% and 39.6%. For single people, the brackets will be up to $45,000, up to $200,000, up to $500,000 and over $500,000, and for married people, those brackets will be up to $90,000, up to $260,000, up to $1 million and over $1 million.
–Big businesses win: The House bill changes the big-business tax rate from 35 percent to 20 percent.
–Small businesses get a semi-win: 95 percent of American businesses are under “pass-though” companies, meaning they “pass though” the business income to the owner’s individual tax rate. Mainly, the plan lowers the tax rate from 39.6 percent to 25 percent.
–The Rich do well: half the benefits of the bill go to the top one percent by 2027.
–Most Americans will see little change till 2023: By 2023, only forty percent of Americans will pay less, twenty-two percent pay more, and the rest will see little change.
–Almost all itemized deductions are going away: This includes deduction for medical expenses, tax benefits for college, deductions for moving expenses, and other deductions will also be gone.
–Education taxes will change: Ted Cruz introduced an amendment that would allow parents to use a special tax-free college savings account to pay tuition for private K-12 schools. The Senate restricts the federal deduction for state and local taxes meaning cities will have a tougher time raising money for schools. Lastly, it may be better for college students. The Tax bill will repeal the tax deduction for student loan interest.
This can be overwhelming to read especially hearing that deductions for medical expenses will be going away. Cosmo Insurance can guide you in picking the right plan for you and your family. We know these changes happening in our country can affect all of us and we are here to help you. Give us a call today at 732-363-3888.