How the tax reform law might affect your bottom line

  • 26 December 2017
  • NormanL
How the tax reform law might affect your bottom line

We've noted the major provisions in the new tax reform legislation. But what happens to individual taxpayers? While most will see their taxes go down, how much depends on a number of factors. To help you get a better idea of how your personal taxes may change under the new law, the Wall Street Journal has prepared a calculator that walks you through the numbers:

President Donald Trump has signed a tax bill into law that will usher in the most far-reaching overhaul of the system in three decades. At its heart is a cut in the corporate tax rate to 21% from 35%. The tax plan also cuts individual rates and aims to simplify the tax code by eliminating some deductions, trimming others, and jettisoning a personal exemption.

In 2019, about 48% of households will receive a tax cut of greater than $500, according to the nonpartisan Joint Committee on Taxation. However, by 2027, many taxpayers might see those cuts vanish, as many of the cuts are set to expire by then.

What does it mean for American taxpayers’ bottom line? Using a simplified version of the Penn Wharton Budget Model, which analyzes the impact of the biggest factors in the law, you can estimate your tax liability for 2018 through 2027. You can also see who may stand to gain and lose.

Remember: the final figures in the calculator are estimates. But it's a useful exercize to see how the new changes affect you. 

And they are also a powerful reminder that the individual cuts do expire in a few years. Plan accordingly...including urging Congress not only to make the individual cuts permanent, but also to put down the national credit card and cut spending.