Taxes have always been a topic worth discussing since the inception of the tax system in the world. Obviously, who wouldn’t want to get in a conversation where you get to talk about and learn about how much money will be taken from you. However, the recently passed tax bill has the New York Times calling it the “most sweeping tax overhaul in three decades,” making it a worthy topic to talk about in almost all coffee tables across the U.S. The question is, are more in favor of the recent reform or against it?
The recently passed Tax Bill is the first major legislative achievement of the controversial President Trump. Enacting a $1.5 trillion in tax cuts for business and individuals, businesses and Americans are somewhat relieved and anxious to hear that 227 Republican votes have led to the passing of the proposed tax bill. This has put the spotlight on the Republicans and the Senate, given that significant changes have been made to the existing tax system.
What came to a surprise to the masses was the swift approval of the bill since it only took two weeks after the bill was proposed to be approved. Although the swift approval may suggest a number of raised concerns from the masses, the changes in the tax system seem to be highly favored. After all, deductions have increased, exemptions have been eliminated and some of the changes can really benefit the working American and hurt a few.
What before was a top rate of 35%, corporate taxes in the new tax plan have only a top rate of 20% for corporations and 25% for small business that pass profits to its owners. This allows small business owners to deduct some earnings and pay. Income taxes which before had the highest of 39.5% in all brackets have also been reduced to 38.5% which means more income for the working American.
Though some have decreased, some have significantly increased by almost a 100%. Standard deduction before the tax plan was at $5,350 for singles and $12,700 for married couples is now at $12,000 for singles and $24,000 for married couples. While Alternative Minimum Tax or AMT has helped a lot of people before, now it won’t since the AMT has now been eliminated.
Child Tax Credit which used to provide $1,000 tax credit per child for families making less than $110,000 has increased to $1,650 per child and extends the credit to those earning $230,000. Estate taxes have also seen a significant change since before. Taxes on estate property valued at more than $5.5 million or $11 million if passed to a surviving spouse has increased the exemption to $11 million or $22 million for a surviving spouse.
State or local and property income tax deductions used to allow taxes to be paid to states and property taxes to be deducted from federal taxes. With the newly passed tax law, deductions for state, local and property taxes have been eliminated.