Politics

Trump Tweets Success as Final Tax Bill Passes House

As expected, the long-awaited GOP tax bill was passed by the House today in a 224-201 vote after several provisions had to be revised to conform to Senate rules. The bill was introduced through a process called budget reconciliation, which allowed for a simple majority vote to avoid a filibuster– a debate tactic used by legislators to stall or prevent a bill’s passage. President Trump is expected to sign the monumental legislation before Christmas.

Despite the fact that Trump and Senate Majority Leader Mitch McConnell have butted heads in the past over issues such as healthcare, Trump congratulated McConnell in a tweet for his “fantastic job both strategically & politically” on the passage of the bill. Trump added, “I could have not asked for a better or more talented partner.”

According to the Tax Policy Center, a non-partisan group, families earning between $50,000 and $75,000 will save $890 per year, while those earning between $100,000 and $200,000 will $2,260 in savings.

Click here to estimate how the new tax bill could affect you and your family.

Key provisions of the Tax Cuts and Jobs Act include:

  1. Repeal of the individual Obamacare mandate that required individuals to purchase health insurance – Beginning in 2019, the Affordable Care Act’s mandate is eliminated.
  2. New tax brackets – 5 instead of 7, but the income ranges change. They start at 10% and rise as follows: 12, 22, 24, 32, 35, and 37%. Previously, the rate for people making over $500,000 ($600,000 for joint filers) was 39.6%.
  3. Changes to the Alternative Minimum Tax (AMT), the additional tax placed on people with higher incomes. The AMT is retained in the new bill for individuals, but the exemption has been increased from $500,000 for individuals and $1M for joint filers.
  4. State and Local Taxes (SALT) – up to $10,000 in property tax, and state and local income tax can be deducted.
  5. The Child Tax Credit is doubled to $2,000 per qualifying child under age 17 – with full refunds up to $1400 for families who owe little to no taxes.
  6. The mortgage-interest rate deduction has been reduced. New homebuyers can deduct mortgage interest only up to $750,000 (previously $1M).
  7. Estate taxes remain at 40% but the exemption level doubles to over $10M for individuals and $20M for joint filers.
  8. Medical expenses can be deducted if they exceed 7.5% of your adjusted gross income.

Corporations will see the following changes:

  1. A reduction in the corporate tax rate from 35 to 21%.
  2. Elimination of the Alternative Minimum Tax (AMT).
  3. A one-time tax on overseas earnings.

The largest tax overhaul in 30 years is being called a “big Christmas present” by the president, but the bill is being heavily criticized by Democrats, who are reporting that the middle class will suffer, while big corporations will reap its benefits. Although supporters of the bill have assured Americans that workers should see an increase in their paychecks as early as February, some are opposed to the fact that the tax cuts for individuals come with an expiration date of 2026, while the corporate tax reduction is permanent. GOP leaders say that they believe future legislators will continue the tax cuts beyond their expiration date.

The IRS has indicated that new tax tables may be available by February. However, payroll companies and employers alike are awaiting direction on whether or not new W-4 tax forms will be released based on the tax bill’s changes to personal exemptions. If that is the case, pay increases may be delayed if employees have to submit new W-4 forms.

tax chart bill passes

*Chart does not account for the Medicare surtax on high earners. Source: House of Representatives, Tax Cuts and Jobs Act, December 16, 2017

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D McCormac

CNN’s calculator is broken!
I am retired CPA who helps friends and family do their taxes. Based on last year’s filings 90% will find savings NEXT year. The other 10% (me) will save as well because last year was a very unusual mix of low income and medium deductions. My average savings will be much higher than the CNN calculator shows. More fake news from CNN.

mike failla

The left always complains about anything the president does. Did you get a load of cryin chuck the schmuck? What a joke. They are against more jingle in your pocket which means the economy will improve even more and that equates to a loss of power for the left. Oh boo hoo. They have been screwing us enough. Payback time!

Sandy Beaches

The Republicans have never been known for doing a good job explaining anything. This needs a very basic visual that explains it. And I mean basic. Some guy, unfortunately I don’t remember his name, not long ago was on FOX and using a simple diagram quickly explained the bill as it was known at that time. He did a GREAT job! The show hosts said the same thing. One even said that, that when the bill was ready he should be hired to take the message to the American people. Republicans; Democrats have 90% of the media behind them 100% of the time. We all know very well they are purveyors of Fake News, Yellow Journalism, Hate Speech, and more. Most people today live in a fast paced electronic world. They’ve lost the attention span to be told anything as big as the Tax Cut & Jobs bill. Roll it… Read more »

Kim

Thank goodness something really BIG got through Congress. President Trump’s other efforts count, too, but this bill will make a noticeable difference in peoples’ wallets, which should help Republican/Conservative candidates sail through the mid-term elections. They need to learn how to “show and sell” it (see Sandy Beaches’ comment, and replies) to voters. Savings on the corporate side are more impressive, and should rev up the economy to levels of GDP that we haven’t seen in decades. I am inclined to go back into business again, now that the wind is at my back. I can’t wait to see what happens in the New Year, but I’m pretty sure it will include trickle-down economics. A dozen or so large corporations have already announced bonuses and raises as a result of this legislation. But let us not be lulled into complacency. The swamp continues to muck up and requires vigilance to… Read more »

Larry in PRNJ (People\'s Rep of NJ)

Don’t mean to rain on anybody’s tax parade but let me share a shower that just fell on me. To my knowledge nothing has been reported, even by the rabid anti-Trump media, that the personal exemption is eliminated in the new tax bill. It reduces my expected tax reduction by $972.00 The personal exemption currently is $4,100 per person. The effect of which greatly reduces the punch of the doubling of the standard deduction. Mind you I am not complaining about a smaller tax decrease, I will take any and all they are willing to shell out. My beef is with not getting ALL the info on this bill regardless of source. Thankfully they left in the slight increase in the standard deduction for those 65 and older of $1,250.

https://www.thestreet.com/story/14427666/1/highlights-of-new-tax-law-that-kick-in-for-2018.html