The recent tax reform enacted by the Trump Administration has left many property owners wondering exactly how their financial situation will be affected. This recent shift in taxation intends to significantly lower income tax bills next year for millions of households, and is the most significant overhaul to the tax code since 1986.
In a statement Wednesday, Trump said: “I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting.”
According to the Tax Policy Center, income-tax rates for everyone will drop temporarily, though the financial impact will be largely concentrated at the top. Families earning less than $25,000 a year would receive an average tax cut of $60; families making between $50,000 and $75,000 will get an average cut of $890; and families making more than $1 million would get an average cut of nearly $70,000.
The Tax Cuts and Jobs Act (H.R.1) provides considerable tax reductions for W-2 earners by modifying tax brackets (see the chart below). This bill eliminates deductions that have historically negatively impacted some return filers, and has replaced them with a higher standard. According to the Farm Bureau, the standard for a joint return was $12,700 in 2017; however, in 2018, that number will increase to a whopping $24,000. Additionally, individual rates have been “adjusted downward and the brackets expanded so that a larger amount of income is subject to lower rates.”
In the above figures, the tax treatment of a married couple with the same household incomes is compared across different combinations of farm and off-farm incomes. These figures are approximately equal to the earned off-farm income of “commercial, intermediate, and residency farms.”
Like my content? Consider buying me a cup of coffee! Squawker Media is a grassroots media outlet comprised of independent journalists and are in desperate need of support to keep this cause going. I appreciate all of my readers, as I would be nothing without your loyalty or support.