Wow, the new tax bill is really a substantial reduction

Looking at the proposed new marginal tax rates and brackets on the senate website (https://www.finance.senate.gov/imo/media/doc/12.2.17%20HR%201.PDF)   from the current 2017 rates on wikipedia (https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2017) how big a tax break can you expect?

Quick math for a family with $150k annual taxable income with the old (2017) method:

  •      10% on $9,325                           =   $932.50
  • +  15% on ($37,950 – $9325) =   $4293.75
  • +  25% on ($91,900 – 37,950) = $13,487.50
  • + 28% on ($150,000 – $91,900) = $16,268.00
  •                                                                ———————–
  •               total (2017)                               = $34,981.75

and now with the new (2018) method:

  • 10% on $19,050                           =    $1,905
  • 12% on ($77,400-$19,050)  =     $7,002
  • 22% on ($140,000-$77,400) =   $13,772
  • 24% on ($150,000-$140,000) = $2,400
  •                                                     ———————
  •           total (2018)                           =$25,079

 

So basically $10k less in tax, or an overall reduction of around 30%

Of course that does not take into account changes to itemized deductions, but at least its a start to wrap your mind around the new tax bill.

 

 

 

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