Editor’s Note: A Certified financial planner emailed this analysis from Bloomberg to me (click below for the full document), “If you’re confused by how the Republican tax bill will affect you, you’re not alone.
“The final version rewrites the tax code in dozens of ways, eliminating deductions, changing rates, and creating brand-new benefits for certain taxpayers, such as business owners. The bottom line, though, is that next year a majority of Americans will get a tax cut. Four out of every five taxpayers can expect a reduction, according to the Tax Policy Center. Overall, the average taxpayer should see their after-tax income rise by 2.2 percent.
“But we should note these statistics can be misleading. Many lower- and middle- income taxpayers will get a tax cut, sure, but it will be so small they might not notice it, and middle-income taxpayers earning $48,600 to $86,100 will get just a 1.6 percent bump, on average.
“Now, if you’re closer to the top of the heap, earning from $307,900 to $732,800, you’ll get a 4.1 percent boost—an average drop in tax bills of $13,480. But even if your taxes do fall in 2018, there’s bad news on the horizon. GOP lawmakers set individual tax cuts to expire over time. By 2027, a majority of Americans will see a tax increase compared with current law. (Corporations need not worry—their cuts are permanent under the bill.)
“How exactly would these changes affect you? It depends on where you live, what you do and how big your family is. You’re more likely to get a tax increase if you live in a high-tax state or lean heavily on deductions—such as unreimbursed employee expenses—that will be eliminated under the bill. To see how Americans fare across different incomes and circumstances, Bloomberg turned to Tim Steffen, director of advanced planning at Baird Private Wealth Management.”
Click here for the full document: How the Tax Bill Will Affect Eight American Families