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Tax Reform Bill Heads to President’s Desk

The Senate and House of Representatives today passed a tax reform package that is expected to be signed by the president. Below is a quick takeaway, but we will provide a more comprehensive look at the bill in the coming days—including a podcast episode dedicated to tax reform.

What Does the Tax Reform Bill Mean for Low-Income Earners?

Aside from lowering the statutory corporate tax rate from 35% to 21%—perhaps the most well-known facet of the tax plan—this bill lowers several individual rates and makes key changes to the tax code that affect low-income earners.

The tax reform bill does not reduce the number of individual brackets, but it does lower the rates for five of the seven:

Old Tax Brackets

Single Filers Tax Filing Jointly Tax
Over But not over % Over But not over %
$0 $9,325 10% $0 $18,650 10%
$9,325 $37,950 15% $18,650 $75,900 15%
$37,950 $91,900 25% $75,900 $153,100 25%
$91,900 $191,650 28% $153,100 $233,350 28%
$191,650 $416,700 33% $233,350 $416,700 33%
$416,700 $418,400 35% $416,700 $470,700 35%
$418,400 - 39.6% $470,700 - 39.6%

New Tax Brackets

Single Filers Tax Filing Jointly Tax
Over But not over % Over But not over %
$0 $9,525 10% $0 $19,050 10%
$9,525 $38,700 12% $19,050 $77,400 12%
$38,700 $82,500 22% $77,400 $165,000 22%
$82,500 $157,500 24% $165,000 $315,000 24%
$157,500 $200,000 32% $315,000 $400,000 32%
$200,000 $500,000 35% $400,000 $600,000 35%
$500,000 - 37% $600,000 - 37%

Other Important Tax Changes

While personal exemptions are eliminated, the standard deduction is increased from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for married filing joint filers. Another change that’s likely to impact low-income taxpayers is the adjustment to family tax credits.

The Child Tax Credit (CTC) is being doubled from $1,000 to $2,000, and the refundable portion will be increased from $1,100 to $1,400, which will likely result in lower-income families seeing CTC-related refund dollars.

Remember to check Taxing Subjects for more updates on tax reform and other tax-industry related news.

Ryan Norton

Whether designing superheroes, penciling caricatures, or just doodling, I always knew I was going to earn some sort of art degree while in college. That was my goal before I decided to trade Edgar Degas for Edgar Allan Poe during a Freshman English class. The BA in English soon morphed into a double-major in English and Philosophy, eventually becoming an MA in English. It only makes sense that I learned of a writing opportunity for a local marketing firm while teaching a first-year college English course. Before I knew it, I was writing and editing tax-related articles for Taxing Subjects, and this has been my home since 2014.

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