ARLINGTON - The GOP proposed tax plan is out!
"What this reform package is guided to do and intended to do is simplify things and rebuild trust with people," says Private Wealth Advisor, Derrick Kinney. So we`re breaking it down for you. "They want to reduce the number of tax brackets down from seven to four and the goal is to put it on a postcard."
To see the chart for those filing and single and/or married click here.
Right now, those in the $0-37,000 range were taxed 10% and 15%. If the current republican tax plan passes, those making up to $45,000 would be taxed at 12%.
"People making higher incomes are more likely to have higher itemized deductions and things to write off than a lower income person doesn`t mean that`s how it`ll play out but it could be, so that bracket there may see the least amount of benefit with the current tax reform," says Kinney.
Middle class families making anywhere between $38-191,600 are currently taxed 25% and 28%. The GOP plan calls for a 25% tax on those who make between $45-200,000.
So because of possible deduction changes, for an average family of four making in the $70,000s.
"They stand to net about $1,700 more dollars back in their pocket," says Kinney.
The top brackets are currently from $191,600 and up - taxed at 33%, 35%, and almost 40%. The GOP hopes to simplify that making those who make between $200,000-$500,000 pay a tax rate of 35% and those who earn a salary of over $1,000,000 get taxed at 39.6%.
Some other hot topics are eliminating deductions for major medical costs, student loan interest, and adoption help.
"Keep in mind this is a huge sweeping tax reform legislation so you can expect a lot of negotiation a lot of bantering back and forth."
Of course many democrats aren`t happy with what's called the trickle down effect.
"Where companies reduce their tax bracket and they then pass on their savings to their employees, they pay them more, which lets them spend more, the economy grows."
But it`s not over till you sign on the dotted line.
"Until we know what the exact tax law says, don`t spend the tax bonus check yet, make sure you know how it effects your situation first," warns Kinney.
Republicans hope to pass it this year - but if not - the question becomes when... and exactly what will go into effect.