What will the latest tax reform mean to Americans?
On December 22nd, Donald Trump signed the Tax Cuts and Jobs Act, which includes many details referring to whether or not the latest tax reform bill will enhance or destitute the average American.
Business taxes in Corporate America
The corporate tax break is the only permanent change with the tax rate dropping from 35% to 21%, the lowest since 1939. This will allow corporate America to reward their employees. In response, Southwest Airlines will be giving $1,000 bonuses to 55,000 and $5M towards charity, Comcast is gifting $1,000 bonuses to 100,000 employees and at least $50 billion investment in infrastructure in the next five years. BB&T has announced for $1,200 bonuses for 27,000 employees with their base wage rising from $12 to $15 per hour; $100 million in charitable donations. AT&T, American Airlines, Bank of America, and over 100 corporate companies will be compensating workers from the latest tax reform. The Act eliminates the corporate AMT. This had a 20% that were in effect only if tax credits pushed a firm’s effective tax rate below that level. This is significant because under the AMT, companies were not able to deduct development spending or investments. This elimination adds $40B to the savings made by the government.
In February, employees will see a higher salary in their paycheck. With the new provisions passed, the standard deduction will double, with the single filer having a tax break from $6,350 to $12,000 and married filers increased from $12,700 to $24,000 (depending what your yearly income is). It will also keep deductions for retirement savings, charitable givings, and student loan interest. The act will expand the medical deductions for both 2017 and 2018. It allows taxpayers to deduct medical expenses that are 7.5% or more of their respective income. The bill will keep the “Alternative Minimum Tax”. It will increase the exemption from $54,300 to $70,300 for single filers and from $84,500 to $109,400 for joint filers. Most of all, this will eliminate the Individual mandate placed by ObamaCare. Due to this, the government will save over $330B by not having to pay their subsidies. These changes will be reverted in 2026.
Child and Elder Care
This will allow parents to use approximately 529 savings plans towards private school tuition. The Balance states, “The Act increases the Child Tax Credit from $1,000 to $2,000. Even parents who don’t earn enough to pay taxes can claim the credit up to $1,400. It increases the income level from $110,000 to $400,000 for married tax filers.” The bill will allow for a $500 credit for each non-child, creating room for elders.
Then- candidate Trump made promises to:
Allow up to $2,000 to be deposited tax-free into a Dependent Care Savings Account. The account would grow tax-free to pay for a child’s education.
End the AMT for individuals.
To end the Affordable Care Act tax on investment income.
This is another major accomplishment made by the Trump Administration and another promise met by President Trump.
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Jorge Velasco is a Political Analyst at Nova News Breaking and theDailyLead.