The end of 2018 has come and it’s time for Americans to start filing. Are the new cuts affecting your tax return? Your yearly income will determine your tax bracket. Knowing where you stand financially will help you.
The Tax Cuts and Jobs Act of 2017 goes into effect this year. This was a major tax reform law that attempts to increase wages and create jobs. This comes at the cost of revenue generated from income taxes. Corporations will see the biggest tax cuts. The average American should see a reduction as well.
Here are some 2017 tax statistics you need to know:
- Wages have seen a 1.8% growth.
- Average household income in 2017: $60,376.
- Average household income in 2016: $53,719.
- The average income for a married couple filing jointly was $117,795.
- The average income for a single filer was $34,940.
- Roughly 30% of households made over $100,000.
- Only the top 1% of taxpayers made more than $434,454.
The Tax Cuts and Jobs Act maintains seven income brackets with notable shifts in percentage of taxable income.
The average married couple’s taxed income will reduce from 25% to 22%. The average single filer will reduce from 15% to 12%. Single filers making greater than 200k will jump from 33% to 35%. The lowest earning Americans will see no change.
There are also other changes you need to be aware of along with these deductions. Personal exemption and the individual healthcare mandate are eliminated. There is also an increase in standard deductions to 12k for single filers, 18k for head of household, and 24K for married couples. For parents, the child tax credit is expanded from $1000 to $2000.
On the corporate side, companies have the biggest cut with a reduction to a flat 21% corporate tax rate from the Tax Cuts and Jobs Act. This hopes to incentivize businesses to remain in the U.S. and possibly have a trickle down benefit for workers.
The average working American should see a significant reduction. Taxes are complicated. It will take at least one more year of data collection to fully determine the effect the new law has on the economy. Be smart with your money and enjoy any extra you might see on your tax return.