Depends on whom you ask, but not for the people that were in the lower brackets already. Don’t get us wrong, this listing of facts is not a political article and won’t bash or elevate Trump. This is just a listing of the facts and with an action plan from our tax office for you to act on!
If last year you were in the lowest Tax Bracket (10%) then you could earn up to $9,275 and pay 10% tax.
Under the plan discussed pre-election, that group loses ground as the new lowest Bracket is 12%.
ACTION….if you were in the 10% bracket last year and were considering an IRA to Roth conversion, do it soon as it will cost you 2% more if the plan goes through.
From $9,275 to $37,500 dollars of taxable income, you win, as that rate is now also 12% when before from $9,275 to $37,650 the rate was 15%.
ACTION… no action, you may want to wait to see if the deal goes as planned, and you could save 3% tax by holding off on that Roth IRA conversation to see what takes shape.
From $37,650 to $91,150 people would pay 25% and would be very close to what was the $37,500 starting line before, so only $150 income difference on the starting line, but after $91,150 people currently pay 28%. Under the proposed plan they would continue to only pay 25% on an additional $21,350, paying 25% up to $112,500.
ACTION…if you earn less than $112,500 of taxable income, then enjoy the extra 3% on the additional 21K if the plan goes through.
If your income was above $112,500 but below $190,150. You are the biggest loser, as you will pay 5% more, the largest proposed tax increase of all, for persons making under $413,350.
ACTION if the income doesn’t vary (pension-driven or settlements) than ROTH NOW if you were planning to, as 5% of the extra $77,650 is $3,882, just for the federal, and more for most states.
The point is, simplification and lowering the corporate burdens to stimulate business doesn’t mean good things for all people. If the proposed framework does pass as planned, then you need to carefully consider where you fall now, what your tax planning goals are and have someone whom does tax planning help you navigate, double check and then take action!
We are just those Tax Sherpa’s! Call us now and GET IN HERE!