President Trump delivered remarks about the tax reform package on Wednesday, promising taxpayers they will see bigger paychecks starting in February, 2018, if Congress can pass the tax bill by Christmas.
If the final tax bill passes, will your taxes really go down? And, if so, how much extra money will you pocket on payday? Based on your income and tax filing status, here’s what you can expect in 2018 if President Trump signs the bill before December 25.
Before we get to the tax bill calculator, let’s get you up to speed on where the tax reform package stands right now. According to Balance, the U.S. House of Representatives and the U.S. Senate passed their versions of the Tax Cuts and Jobs Act on November 16 and December 1, respectively. A final draft of the bill must be finished by December 15 so it can be sent to the Joint Committee Taxation for analysis, and the final bill is expected to be sent to each house of Congress for a vote next week.
A calculator created by CNN gives taxpayers an idea of how the tax bill could potentially affect your paycheck. Keep in mind, the results are just an estimate that will have to be adjusted if the legislation is finalized and are grouped by an income range, not by your exact income.
To use the calculator, taxpayers must choose their state of residence, income level (i.e. $0 – $20,000, $20,000 – $40,000, etc.), filing status (joint, single, or head of household), and number of children.
For example, if you live in New York, have one child, earn up to $20,000 per year, and file as head of household, CNN’s tax bill calculator indicates that your taxes will go down in 2018 — after-tax income would go up by one percent. However, the small amount of extra cash in your paycheck won’t last forever. The calculator also reveals that, under the proposed tax plan, if you filed the same in 2027, your after-tax income would decrease by 0.5 percent.
A married couple in New York, with one child, who file jointly and earn between $20,000 and $40,000 would see their taxes go down in 2018 and their after-tax income will increase by 2.5 percent in 2018. Your taxes would rise in 2027, forcing your after-tax income down by 1.1 percent.
Head over to the CNN tax bill calculator to see how the new tax plan, if signed into law, could affect your paycheck.