Now that the president and his administration have announced their plans for an overhaul to our nation’s tax system and code, most taxpayers are wondering how it will affect them. While there are many reports that the nation’s wealthiest will get even wealthier, thanks to the tax breaks laid out in the plan, the administration continues to tout the benefits that will be coming to the middle class.
Is it all political rhetoric or do the middle class really have something to look forward to? Generally, it looks like the new proposals could lead to lower tax bills for many people. However, at the same time, many of the most popular tax deductions could also be cut, which might not sit well with a lot of taxpayers.
On the plus side, the president would like to raise the standard deduction for both single filers, as well as joint filers, which would lead to lower tax bills. It would also mean an easier tax return process because most people would not have to itemize their deductions. The downside is that many tax deductions people count on every year would be eliminated, except the mortgage interest deduction and the charitable contributions deduction.
The plan also calls for fewer tax brackets, which would likely lead to a lower tax bill for most taxpayers, but not all. The new tax plan also calls for greater tax breaks for parents, especially those who pay for childcare, as well as possibly increasing the Child and Dependent Care Tax Credit. Business owners would also see lower tax rates under the plan, which would be a huge boost to small businesses.