There are many parts to this new tax bill and with so many stories swirling around, it is hard to know where you will fall in this new bill when you file your taxes.
Almost every income tax bracket will see a decrease in their rates by close to the same percentage. This means that almost everyone will be paying fewer taxes next year. Yet there is a catch, the rates will revert back after eight years, leaving in its place a huge federal budget deficit since everyone will have been paying fewer taxes.
“Revenues are going to go down and there is no sign that spending by the federal government is going to change in any material way to offset that. The result of that? We’re talking about bigger deficits,” Hugh Johnson, Hugh Johnson Advisors, said.
Johnson, a finance expert, explains while your income taxes might go down, you could still not be getting as much as you think back since you will not be able to take as many deductions.
“There’s going to be a lot of grumbling because you’re going to lose a lot of that. Let’s not forget, at the same time, they’re going to lose some of that, they will also make up a portion of that by paying a lower tax because the tax rate will be lowered for their bracket.”
Despite individuals taxes having to go back to their original rate, corporate tax rates, which will be lowered from 35 percent to 21 percent, will be permanent.
“It will help the economy a little bit but not nearly as much as people expect.”
All of New York’s representatives, except Representative Tom Reed, Chris Collins, Claudia Tenney and John Katko, voted against the bill mainly because of the limits it placed on SALT deductions. The new bill will allow a homeowner in New York to deduct state and local taxes, but only up to $10,000.