(UPDATED FOR CURRENT VERSION OF BILL 12/20/2018) I've spent quite some time looking at how the GOP tax proposals will impact income tax rates. If you want to know how to determine the impact on your taxes I've developed an online calculator for you to use below. The major impacts of the proposals on taxpayers are:
- Updated tax brackets with generally lower rates. Top rate has dropped from 39.6 to 37%.
- Standard deduction has been doubled. This will reduce the number of people who itemize. Currently about 30% of filers itemize. The Tax Policy Center estimates that this will drop to 5% of filers.
- Personal deduction has been eliminated.
- State income tax and property tax deduction has been capped at $10,000 (combined). This impacts those who typically itemize.
- Child tax (for children under 17) credit has been increased to $2,000 from the existing $1,000 per child. Income restrictions have been raised for this credit.
- A credit of $500 for elder care or children 17 and over has been added. (I'm unsure if the income restrictions apply to this credit. I applied the restriction in the below calculator.)
Other changes include reduction of corporate income taxes and increases in the estate tax exemption. A $200 tax credit has been added for non-child dependents (elder care).
Want to see how the proposal will affect you? Use our tax comparison calculator below.