GREENVILLE, N.C. (WNCT) – With the House and Senate still working to approve a final tax bill, WNCT decided to take a look at how the two proposals on the table could impact you.
Republicans have hailed the plans as a win for the middle class and poor. While each tax bracket would see lower tax rates, the deductions you and your family have relied on in the past could be the determining factor of whether you pay less or more.
Under the Senate’s proposal, the corporate tax rate would be decreased from 35% to 20%. Ideally, that would allow the economy to grow and make it more attracting for companies to invest in expansion projects and adding more jobs.
“Get more people working, that way the tax base is a lot higher, rather than just saying this company makes a lot of money, we’ll have them pay for everything,” said Pitt Co. GOP Chairman Mark Stewart.
However, some Democrats believe the corporate tax cut will only benefit the wealthy, while the middle class and poor pay.
“They (Republicans) feel like they live in safe districts and so they’re not really accountable to the people,” said Marques Thompson with Democracy NC.
While the Senate and House plan’s would lower taxes for each income bracket, those changes are temporary. The reductions expire in 2025. The corporate tax break would be permanent.
“Very interesting how it turns out,” said Keith Kidwell, a tax expert at H & R Block in Washington.
Kidwell ran several scenarios to see how the Senate tax proposal would impact families.
“A couple making $55,000, married, with substantial itemized deductions, will see a tax increase of about 40 percent,” Kidwell said.
“A couple making $80,000, married and itemizes to a lower extent, they’ll see about a 25 percent tax decrease,” he said.
The deciding factor of who gets a tax cut and who gets an increase will depend on which deductions you generally use.
Under the Senate version, standard deductions for individuals and married couples double, increasing to $12,000 and $24,700. However, the personal exemptions of $4,050 for yourself, spouse, and each of your dependents, would be eliminated.
To offset that, Republicans have doubled the child tax credits to $2,000. But depending on whether those tax credits are refundable, which lower income families rely on, and how many children you have, could have a drastic impact on how much, if any, money the poor get back.
Another eliminated deduction that will likely impact many people, especially in highly taxed states, is the state and local tax deduction. As a compromise, however, Republicans in the Senate did propose to allow up to $10,000 in property tax as a deduction.
To get an idea of how the House and Senate tax plans could impact you, click here.