It’s a big win for President Donald Trump. The $1.5 trillion tax bill passed in both the House and Senate Wednesday and it will soon be put on the president’s desk to sign into law, making it the biggest reform of the country’s tax laws in more than three decades.
“This is the kind of relief that Americans deserve. This is the kind of tax reform and tax cuts that get our economy growing to reach its potential,” said House Speaker Paul Ryan.
The bill eliminates the Affordable Care Act’s individual mandate, meaning people will no longer be subject to a fine if they do not buy health insurance. There’s a $10,000 cap on state and local tax deductions.
“I think that all sates should be winner states, and to that end I think we should continue to have the ability to deduct state and local taxes. New Jersey has the highest property tax burden in the nation and we have a graduated state income tax,” Rep. Leonard Lance said.
There’s also the corporate tax rate decreasing from 35 percent to 21 percent, and the top tax rate for individuals drops from 39.6 percent to 37 percent.
Rep. Tom MacArthur, the only New Jersey representative to vote ‘yes’ on the bill, argued this is good news for taxpayers in South Jersey, saying people will now be able to keep more of their hard-earned money. He wrote the bill “provides real relief for families and businesses — by simplifying the tax code, lowering rates, doubling the standard deduction, providing tax credits for childcare and care of adult dependents; all while preserving the deductibility of property and state income taxes.”
So what does this mean for you?
In 2018, this is what taxpayers of all income levels can expect:
- If you make below $25,000, an average tax cut of $60
- If you make between $25,000 to $49,000, an average tax cut of $380
- If you make between $49,000 to $86,000, an average tax cut of $930.
- If you make between $86,000 and $150,000, an average tax cut of $1,810.
- If you make more than $150,000, an average tax cut of $7,640.
- If you make between $308,000 and $733,000, an average tax cut is $13,500.
- And finally, for the top one percent, or people making more than $733,000, an average tax cut is $51,000.
Governor-elect Phil Murphy says this bill has sold out the American middle class, saying only the wealthy will benefit.
“Any tax saving to the middle class, working families and seniors are either minimal or mythical, and in any case, will expire. Meanwhile, the benefits to big corporate interests are permanent.
Fellow Democrats like Sen. Cory Booker call Wednesday “one of my most disappointing days as senator.”
Republicans, on the other hand, were celebrating the day’s victory.
“When you think you haven’t heard this expression, but we are making America great again. You haven’t heard that have you?” the president said.
The public will find out which party is right when the tax changes go into effect. For businesses, that’ll be in January. You’ll see changes on your paychecks from work starting in February.