Dec 15, 2017

2017 Tax Reform Bill's Individual Effects

This holiday season, most Americans may get a Christmas gift from Congress-tax reform. The House and the Senate have recently passed tax-reform bills that could significantly simplify tax regulation and lower tax rates for most individuals. But first the House and Senate will have to reconcile the differences between the two bills before finalizing the legislation and sending it to President Trump. For some Americans the tax reform isn't a gift; their highest marginal tax rate could go up as much as two percent-far worse than a lump of coal. Both bills change the current individual income tax brackets and rates as well as altering numerous income deductions. Below is a breakdown of differences between the current law, the Senate bill, and the House bill as they exist today. We will continue to monitor the changes as the bills progress.

Personal Income Tax Rates: Generally, both bills would keep or lower the tax rates for all individuals reporting net taxable income below $160,000 annually and all couples below $260,000 annually. Both bills would raise taxes by two percent for individuals reporting net taxable income between $200,000 and $424,950 annually. The House bill would raise taxes by two percent for couples reporting net taxable income between $260,000 and $424,950 annually. The Senate bill would do so for couples reporting net taxable income in excess of $400,000 per year but less than $424,950. Additionally, the House bill contains a "claw back" provision to incrementally remove the benefit of the 12% marginal rate from Americans making over $1 million in taxable income. For more details, see the charts below.

Single

Current Tax Rates for 2018

Senate Bill Proposed Rates

House Bill Proposed Rates

10%	Up to $9,525	10%	Up to $9,525	12%	Up to $45,000
15%	Over $9,525	12%	Over $9,525	25%	Over $45,000
25%	Over $38,700	22%	Over $38,700	35%	Over $200,000
28%	Over $93,700	24%	Over $70,000	39.6%	Over $500,000
33%	Over $195,450	32%	Over $160,000
35%	Over $424,950	35%	Over $200,000
39.6%	Over $426,700	38.5%	Over $500,000

Married Filing Jointly

Current Tax Rates for 2018

Senate Bill Proposed Rates

House Bill Proposed Rates

10%

Up to $19,050

10%

Up to $19,050

12%

Up to $90,000

15%

Over $19,050

12%

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