The Tax Cuts and Jobs Act’s final version, which at last has made its way through the House and Senate, would be reducing the taxes for all the brackets of household, as per a final analysis was done by the Tax Foundation.
“To help provide a sense of how the Tax Cuts and Jobs Act would impact real taxpayers, we’ve run the taxes of eight example households,” the foundation wrote. “Our results indicate a reduction in tax liability for every scenario we estimated, with some of the largest changes in after-tax income accruing to moderate-income families with children.”
The Foundation further says that every type of family it had to score had surprisingly realistic qualities, that it could exactly predict the impact of the act, on the different individuals and there individual income tax provisions.
They explained it with an example, according to which an individual – single – earning $30,000 without any children would be paying $4331 as tax today. Under the new act, the taxes would decline by huge 9 percent, making that person eligible to pay only $3,953; all the same, he would see the money he is left to spend, in this case by 1.26 percent.
If that individual is earning $75,000 without any children, would see the taxes applicable to them go down by huge 11 percent, while the Income after tax increases by 2.37 percent. Making his payable taxes; 16,104 shrink down to $14,327.
In another one of such scenario, a single individual with two children and the income scale reaching up to $52,000, would be paying 36 percent less in their taxes and would enjoy an after income raise of 3.64 percent. Under the Tax Cuts and Jobs Act, he would be paying $3,306 instead of $5,198 he pays now.
The income of $85,000 would allow a family and two children, the tax reduction of 20 percent making their taxes go to $8,782 from $11,035.
Similarly, a family where both the parents are working, and have two children with a combined salary of $165,000, would experience a tax reduction of 8 percent, and their after tax income increase by 1.35 percent.
Lastly, a family which is earning a high salary of $2 Million and is supporting two children in a $2.5 million home, would experience a decline of 3 percent while the after tax income increases with 0.95 percent.
“All of our sample filers receive a tax cut, but the size of that reduction varies,” the Tax Foundation explains in its Analysis. “The significantly higher standard deduction, combined with lower marginal rates and a more generous (and more broadly available) child tax credit, drives the reductions in tax liability for low- and middle- income filers. A reduction in itemized deductions limits reductions in tax liability for upper-income earners, though these filers benefit from the modified alternative minimum tax and lower top marginal rates. As these sample taxpayers demonstrate, most taxpayers across the spectrum experience lower tax bills under the Tax Cuts and Jobs Act, albeit temporarily.”