Final compromised tax brackets

[Rotish]

From Bloomberg News

For joint filers:

10 percent: $0 to $19,050
12 percent: $19,050 to $77,400
22 percent: $77,400 to $165,000
24 percent: $165,000 to $315,000
32 percent: $315,000 to $400,000
35 percent: $400,000 to $600,000
37 percent: $600,000 and above

For single filers:

10 percent: $0 to $9,525
12 percent: $9,525 to $38,700
22 percent: $38,700 to $70,000
24 percent: $70,000 to $160,000
32 percent: $160,000 to $200,000
35 percent: $200,000 to $500,000
37 percent: $500,000 and above

[FIREshrink]

Where’s the simplification?

[Gas money]

Marriage penalty in full effect. Final brackets look worse than earlier proposed senate ones.

[InfoRPh]

Gas money wrote:

Marriage penalty in full effect. Final brackets look worse than earlier proposed senate ones.

Click to expand...

Was just going to say the same thing.  Marriage penalty lives on...

[FIREchief]

Interesting.  For MFJ, the 24% bracket changes to $165K to $315K (was $140K to $320K in final Senate version).  Top rate/bracket changes from 38.5% @ $1M to 37% @ $600K.  Net effect for taxable incomes over $320K, but below $600K is $100 savings.  Beats a stick in the eye!   8-)

[VagabondMD]

Calculation in my head suggests that it is close to a wash.

I did better in the brackets with the senate’s first bill. It looks like any benefit in these brackets will be wiped out by the SALT. I am guessing that I will be +/- $5,000, but I will calculate later.

[docnews]

SALT exists! Limited to $10k but not just limited to property tax.

[docnews]

Also child tax CREDIT of $2k with phaseout beginning at a higher $500k!

[Physiciancouple.com]

This was changed to 400k per NYT

[RosieQ]

I believe that the brackets for pass through business deduction was also limited further. Per NY times:

“Owners of so-called pass-through businesses, who pay taxes on their profits at the owner’s individual tax rate, would receive a slightly less generous tax break than the original bills called for, allowing a 20 percent deduction on profits they earn. That deduction would phase out — with some exceptions — starting at $315,000 of income for couples. The Senate bill included a larger deduction, 23 percent, and a higher phase-out point, $500,000 for couples.”

[VagabondMD]

I did the math and based on my (probably screwed up) calculations and my (reasonable estimate for) expected income for 2018, and I am saving approximately $10,000 in Federal income tax compared to what I would have paid on the same income and deductions with the 2017 brackets and rules.

If we can classify our imaging center business ownership as a passthrough entity, that might increase the savings.

[VagabondMD]

FIREshrink wrote:

Where’s the simplification?

Click to expand...

What are you talking about? There's nearly 600 pages of simplification.

[Lithium]

Good luck fitting this on a postcard.  Retention of seven brackets, marriage penalty, AMT, and most of the deductions the House bill axed.  Reducing deductions such as SALT and mortgage interest without indexing to inflation is worse than both eliminating them and leaving them unchanged.  I'm sure the stupid Pease limitation hasn't gone away, nor has the Medicare capital gains surtax.  Our tax system still sucks, and this doesn't make it any better.

[docnews]

I save $7657 if I earn the same next year with these new brackets - personal exemption + child credit.

The big unknown for me yet is the "pass-through" question since I am my own business. But I'm thinking I will be excluded.

EDIT: SALT changes do not effect me since I'm under the $10k for property plus state taxes.

[SwanSong]

Looks like a savings of about $12k for me.  Keep in mind that personal exemptions are being phased out, so while the child tax credit is nice, part of that is taken away with losing personal exemptions.  The savings from the tax brackets alone comprises the bulk of it, and hitting the AMT is simply not a thing anymore for my specialty.