What you need to know about the tax bill

RABUN COUNTY — President Donald Trump, on Dec. 22, 2017, signed the Tax Cuts and Jobs Act, a GOP tax plan designed to lower taxes across the board, create jobs and deliver bigger paychecks to Americans.

The $1.5 trillion tax overhaul is focused to raise the federal deficit by hundreds of billions of dollars over the next decade.

So, why is this important and who does this effect?

Every American family and business is affected, including those in Rabun County.

Generally speaking, most filers will benefit from the bill, which will take effect almost immediately after Jan. 1.

One of the major beneficiaries featured in the new legislation is most average income individuals in Rabun County, who bring home $40,000 and primarily rely on their main source of income from a paycheck, will stand to benefit from the tax rate changes.

Withholding allowances should provide proof of this early in the year, according to the House and Senate Conference Committee (HSCC).

On the flip side, for individuals who earn a lot of money, the reduction in the top rate from 39.6 to 37 percent will mean a much bigger cut, though, in most cases not as much as other benefits in the bill targeted to the wealthy, including the indirect effects of the big corporate tax cuts.

According to U.S. Senator David Perdue (R-GA), who addressed concerns regarding the false claims being made about the impact of the Republican tax cut plan, the plan will not just benefit the wealthy, but instead everybody.

“A family of four who makes the median income of $73,000 a year is going to get a 60 percent reduction in their federal taxes,” Perdue said at a press conference at the Senate. “A single working mother, who has to find child care and find her way to work, is going to get a 75 percent tax cut.”

According to the House and Senate Conference Committee, small business owners with an income of $100,000 per year who earn compensation from their non-corporate business, will likely see a tax cut of more than $2,600.

When it comes to big businesses, a 14 percent tax deduction can be expected as a result of the recently passed legislation. The corporate income tax rate will be lowered from 35 percent to 21 percent.

In addition to their tax break, corporations can also bring home any foreign income kept overseas to avoid taxation.

According to the Tax Policy Center (TPC), large corporations are to pay at least 10 percent of their total foreign income.

The plan also includes a 12.5 percent tax on all intellectual property in hopes of keeping corporate tax revenue in the U.S.

The House and Senate Conference Committee said the plan significantly increases the standard deduction to protect roughly double the amount of what an individual earns each year from taxes – from $6,500 and $13,000 under current law to $12,000 and $24,000 for individuals and married couples, respectively.

Another major aspect featured in the tax overwrite eliminates ObamaCare’s individual mandate penalty tax.

According to the House and Senate Conference Committee, the repeal will provide families with much-needed relief and flexibility to buy the health care that’s right for them if they choose.

However, according to the Congressional Budget Office (CBO), repealing ObamaCare’s individual mandate will cause 13 million fewer Americans to be insured in 2027.

Also to make an impact on locals, specifically students, is the student loan interest deduction which repeals tax deduction for interest paid on federal student loans. Under current law, borrowers can deduct up to $2,500.

Another education tax change listed in the plan is the graduate student tuition, which according to the House and Senate Conference Committee, provides support for graduate students by continuing to exempt the value of reduced tuition from taxes.

Ultimately, it eliminates Section 117(d)5 of the tax code, which allows institutions to waive or reduce tuition costs for graduate students without tax implications.

Another positive notable mention, the tax act lowers individual taxes and sets the rates at 0, 10, 12, 22, 24, 32, 35, and 37 percent so people can keep more of their money.

For anyone with children, the tax overhaul will take action to support more American families by expanding the child tax credit from $1,000 to $2,000 for single filers and married couples.

According to the House and Senate Conference Committee, the tax credit is fully refundable up to $1,400 and begins to phase-out for families making over the $4,000.

At the end of the day, what the average person needs to know, is to stay well informed of their current situation and consult a local tax professional to further examine the impacts the new legislation might have.