Christmas is only days away and it looks like Donald J. Trump will deliver on his promise to give American taxpayers a present.
But will it be a "big, beautiful tax cut" as Trump characterized the legislation? Or will it be a bigger Internal Revenue Service bill? Or will it not make much difference at all?
Who gets how much of a tax cut? House Speaker Paul Ryan (R-Wisconsin), who's career in the House has centered on budget and tax bills, reiterated in his floor speech this afternoon touting H.R. 1, the Tax Cuts and Jobs Act, that "the typical family making the median income will get a $2,059 tax cut next year alone."
Following that speech, the House approved the bill 227-203. The Senate vote is expected later today or early Wednesday, Dec. 20.
UPDATE, 3:45 p.m. CT Tuesday, Dec. 19: The Senate, during its consideration of the House-passed tax bill, has stripped out some "smaller" provisions in order to meet that chamber's budget-restricted reconciliation voting rules. Some of the 529 plan expansions for private and home school expenses are reportedly among the changes being made. This means once the Senate does pass the bill, which is still expected, H.R. 1 will go back to the House for final-final approval before heading to 1600 Pennsylvania Avenue for signing into law.
UPDATE, Wednesday, Dec. 20: The Senate approved early (around 1 a.m. ET) Wednesday, Dec. 20, the revised conference tax plan by a 51-48 party-line vote. The House will re-vote on the tweaked bill shortly approved the tax bill for a second time early Wednesday afternoon by a 224-to-201 vote.
However, the consensus of nonpartisan economists and tax analysts is that that the more you make, the more of a tax break you'll get from the GOP plan.
Higher income households receive larger average tax cuts as a percentage of after-tax income, notes the Tax Policy Center (TPC), the Washington D.C.-based nonpartisan think tank of the Urban Institute and Brookings Institution.
By 2019, the bill's second year in place, households with nearly $90,000 in income would see a $1,080 cut, while those making around $750,000 would take home an additional $53,000, according to the TPC.
However, since the individual tax provisions in the bill are temporary, that good tax fortune won't last.
Unless a future Congress acts, tax provisions for you and me in H.R. 1 will end in 2026. That means, says the TPC, that by 2027 almost half of all Americans would pay more in taxes.
Calculators to estimate your new tax liability: But being here-and-now Americans, we're not worried about 10 years down the road. We want to know what's in the bill for us.
Since taxes are so personal, it's hard to say specifically. But several websites have published calculators that give us a rough idea of where our taxes will stand once the Tax Cuts and Jobs Act becomes, as expected, law.
Here are some places you can check out what you're 2018 tax bill, due when you file your not-postcard-sized return in 2019.
Three of the sites provide standard-type calculators where you enter in your expected income, some details about your personal situation and then hit enter to get an idea of your taxes. They are:
Remember, all these calculators will provide you only a general idea of what your taxes might be in the coming years that H.R. 1 is in effect.
I noticed that none of them had a place for investment earnings, that are and will remain taxed at lower capital gains rates.
And the Post's graphic forced me to count two children, which probably is why my entry there gave me a better result. The hubby and I don't have any kiddos for whom we can claim the increased child tax credit and we won't be able to borrow a pair from our big-family neighbors at tax time.
Still, it gives us ideas of where we stand. Whether those ideas are positive or negative and will remain that way in April 2019 remains to be seen.
You also might find these other tax reform posts of interest:
- Highlights of the GOP tax bill that's about to become law
- More (oh joy!) GOP tax bill proposed changes
- How taxes on pass-through businesses would work under the GOP tax plan