Lower taxes for everyone! It was one of the main the rallying cries of our new President on the campaign trail. Make no mistake, Donald Trump has made it clear that he plans to lower taxes, and with both the Senate and Congress in Republican control there’s little doubt that tax changes are coming. Throughout his campaign and since he was inaugurated in January, President Trump has continued to make taxes one of his main targets. However, many questions still remain as to just how much taxes will be lowered and who will end up as the biggest benefactors.
Tax Cuts for Everyone…Almost
While the answers remain uncertain until the actual changes are implemented, there are some strong clues to how American taxpayers will be affected, thanks to Trump’s already-stated proposals. According to the numbers being thrown around, the nation’s top 1 percent stands to gain the most from Trump’s revised tax plan and tax cuts. Both the president as well republican lawmakers agree that a tax cut is coming, they just don’t agree on how much and who will reap the rewards. Meantime, while the president promised that everyone would see some tax savings, the reality is, there are many who won’t. In fact, even some of the nation’s higher earners could see their tax percentage increase under Trump’s proposed plan of a new three-tier tax bracket. As for the middle-class, several taxpayers that fall into this category could also see their tax bill rise.
Some Middle-Class Families Could Pay More
Despite the new administration’s promises to lower taxes for the middle class, there are some people in certain economic and life situations that will be shocked to see their tax bill go up. How is that possible? Here are a couple reasons why. First, Trump wants to eliminate the head-of-household filing status. He also wants to end personal exemptions. The problem is those moves would end up causing an increase for both single-parent households and large middle-class families. While, it’s true that many, if not most, middle-class income families will see a tax cut, albeit a small one, there are some taxpayers that will actually end up paying more. For someone struggling to get by on about $50,000 a year, that extra tax bill could be crippling.
Meantime, Congress sees things a little differently than Trump. While House Speaker Paul Ryan’s plan would also decrease the number of tax brackets, it would not negatively affect those who are currently in the lowest bracket. Additionally, it would not eliminate the head-of-household filing status, and it would change the personal exemption into a personal credit of $500. So, while both the president and republican lawmakers both want to lower taxes, and both claim those proposed cuts will benefit everyone, especially the middle-class, there are specific differences that must still be ironed out. Stay tuned, because how these issues turn out will play a huge role in how much you end up paying in taxes for the foreseeable future.