- The Republican tax plans are being billed as a boon for hard-working middle-class Americans.
- But analysts have pointed out that the proposed tax plans from the House and Senate will also give a
- We estimated
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Here's what Trump's tax plan means for people making between $300,000 and $10 million a year
We estimated potential tax changes for single, childless taxpayers making $300,000, $500,000, $1 million, or $10 million a year.
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Republican leaders
Tax reform is being billed as a boon for America's middle class by Republicans and the White House. But many have pointed out that a number of changes in the Tax Cuts and Jobs Act give a few boosts to the wealthiest in the country.
We were curious to see how the proposed changes to the tax brackets and the proposed eliminations of many itemized deductions might change the amount of taxes owed by wealthy Americans in 2018, so we ran the numbers ourselves.
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Our original analysis in early December compared the current system, the House's proposal, and the Senate's proposal. But reportedly has slight changes
We have updated our analysis to compare the current system, the Senate's original proposal, and the conference committee's version. Comparing the differences between the Senate's proposal and the conference committee's proposal is especially useful, since only the top tax bracket is different.
First up, here's how tax reform would affect a single, childless taxpayer earning $300,000 a year:
Next, here's how tax reform would affect a single, childless taxpayer earning $500,000 a year:
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Next, here's how tax reform would affect a single, childless taxpayer earning $1 million a year:
And finally, here's how tax reform would affect a single, childless taxpayer earning $10 million a year:
For our calculations, we assumed each theoretical taxpayer would itemize deductions and not be subject to the Alternative Minimum Tax. (More on why we made these assumptions below.)
How tax reform could affect a wealthy, single, childless taxpayer under the Senate Republicans tax plan
- increase of $1,491.
- increase of $7,841.
- savings of $9,758.
- savings of $222,004.
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How tax reform could affect a wealthy, single, childless taxpayer under the conference committees tax plan
- increase of $1,491.
- increase of $7,841.
- savings of $16,547.
- savings of $361,435.
Most Americans will see a slight increase in their take-home pay under the current proposals. But all of that may change as many provisions are set to expire. Some analysts have said that nearly half of Americans would see a tax increase if that happens.
Exactly how much taxpayers will save if Republicans succeed in overhauling the US tax code will depend on many factors.
It's noteworthy that even just from the changes to the tax brackets and the eliminations of deductions, very wealthy households, including President Donald Trump, stand to benefit handsomely from the plan. But, in our estimates, those making around $200,000 to $500,000 would benefit less from the proposed changes to the tax brackets and deductions.
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Another interesting detail is the tweak to the top individual tax bracket proposed by the conference committee. That change to 37% from the Senate's proposed 38.5% could give a huge boost to ultra-wealthy Americans, but doesn't change anything for those earning around $200,000 to $500,000.
How we arrived at these numbers
Calculating taxes is complicated.
And it gets even more complex the higher your household income becomes. High earners may make money in ways that go beyond a traditional salary, such as through investment returns or real estate income.
The eligibility to claim different deductions also varies from person to person. (We know, because we tried a bunch of combinations while calculating these examples.) So, we tried to use only the deductions that the vast majority of people under a given income bracket actually use, according to the most recent IRS data.
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We focused specifically on the potential changes to the amount of taxes owed by different income groups if the proposed changes to the tax brackets and the proposed elimination of deductions were to go into effect.
To put together the charts, we made the following assumptions to capture what would happen to a "typical" individual earning $300,000, $500,000, $1 million, or $10 million:
- CRS analysis
- not
- primarily
- about 1% of single taxpayers
- increased
- smaller details that might benefit wealthy people
- private school tuition
- one-time repatriation tax
- H&R Block's tax calculator
Just in case all of that above doesn't make it clear, this article is not a comprehensive list of what will happen to your taxes if you earn an income of $300,000, $500,000, $1 million, or $10 million. Contact your tax adviser for advice catered to your specific situation.
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