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Result of Comparing Current Tax and Tax Reform

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Result of Comparing Current Tax and Tax Reform

Postby chicagotech » Fri Dec 22, 2017 12:47 pm

This comparison result uses Tax Plan Calculator (http://www.taxplancalculator.com), which is based on Adjust income $165,000 with two kids.

Current Tax System
You'd save $0
Your federal tax bill: $22,426
-- Detailed calculations --

Deductions
"Personal exemption" deduction: $16,600

Total State And Local Tax (SALT) deduction: $19,928
-- State income (or sales) tax deduction: $4,928
-- Local income tax deduction: $0
-- Property tax deduction: $15,000

Your other deductions: $4,000

Your standard deduction is: $0

Pease limits REDUCE deductions by: $0

Your total deductions: $40,528

Your taxable income is: $124,472
Tax rates
In $0 - $19050 bracket, you pay 10%. Cost: $1,905
From $19050 - $77400, 15%. Cost: $8,752
From $77400 - $156150, 25%. Cost: $11,768
Tax credits
None
Total federal tax bill: $22,426

Tax Reform Bill
You'd save $3,527
Your federal tax bill: $18,899
Rate cuts end in 2025 unless extended

Deductions
"Personal exemption" deduction: $0

Total State And Local Tax (SALT) deduction: $10,000

Your other deductions: $4,000

Due to the bill's changes, you should SWITCH
to taking the increased standard deduction ($24000)
rather than itemizing (now worth $14,000). With switch:

Your total deductions: $24,000

Your taxable income is: $141,000
Tax rates
In $0 - $19050 bracket, you pay 10%. Cost: $1,905
From $19050 - $77400, 12%. Cost: $7,002
From $77400 - $165000, 22%. Cost: $13,992
Tax credits
The family tax credit, for 2 children
and 0 other dependents, gives you $4,000
Total federal tax bill: $18,899
More Info
Results are for the final bill
passed by the Senate Dec 20.
Important changes:
-- medical deduction NOT ended
-- student loan deduction NOT ended
-- tuition waivers NOT ended
-- mortgages capped at $750k for
deduction; current homeowners
grandfathered in
-- child credit made more refundable
-- rates lowered (see details to left)
-- state/local deductions now allowed up
to 10k (property, income, or sales)
Other notes:
These do not change from current law:
-- social security earnings not changed
-- business owner expensing not changed
-- EITC not changed
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chicagotech
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