I know it’s a little soon to be talking about filing your 2017 tax return (though, it’s never actually too early!), but a bit of news happened this week that could drastically change the amount of taxes you’ll pay next year.  Donald Trump recently released his plan to cut taxes for the upcoming filing year, and if his plan becomes legislation, it means a full overhaul of the current tax code.

It’s important to note that the below table is not official, and the information within it is only conjecture at this point because no law has been passed. It’s likely to take a bit of negotiating to get something done, so the final result may look different. But it’s still fun to look at now and see what’s potentially around the corner.

2017 Federal Income Tax Brackets (Single)

If Taxable Income Is ...	The Tax Is ...
$0 - $37,950	12% of the taxable income
$37,950 - $191,650	$4,554 + 25% of the taxable income over $37,950
$191,650 +	$42,979 + 35% of the taxable income over $191,650

2017 Federal Income Tax Brackets (Married)

If Taxable Income Is ...	The Tax Is ...
$0 - $75,900	12% of the taxable income
$75,900 - $233,350	$9,108 + 25% of the taxable income over $75,900
$233,350 +	$48,470.50 + 35% of the taxable income over $233,350

If you’re wondering where the rest of the table is… well, that’s it.  Three tax brackets, and tax rates of 12%, 25%, and 35%. Gone is the seven bracket system, and here you see a much more simplified setup, with the top rate being 4.6% lower than in previous years (39.6% was the top rate in 2017).

New 2017 Standard Deduction

Another big benefit from the newly introduced Trump tax code is the increase of the standard deduction. Your proposed 2017 standard deduction amounts are as follows:

• Married filing jointly and surviving spouses: $24,000 (previously $12,700)
• Single, or married filing separately: $12,000 (previously $6,350)

But with all of these tax decreases, there is one glaring negative. The administration is looking to kill off all but two tax deductions that can be claimed on your tax return: the home mortgage interest deduction and charitable donations. Say goodbye to claiming a home office, travel expenses for a new job, state income tax, etc. Part of the hurt from this change will be relieved by the higher standard deduction amount, but for filers who love to add line after line of deduction? Well, those days may be over.

Related: The “Old” 2017 Standard Deduction and Exemption Limits

Please remember that these rates are for the income you receive in 2017 and the tax return you will be filing in early 2018. Of course, nothing is official until the IRS confirms what the tax rates will be. This likely won’t happen for a good long while, so we will continue to monitor the situation.

Related: File your tax return for free with Credit Karma!

UPDATE – September 27th, 2017

Five months ago, Gary Cohn and Steve Mnuchin provided a peek at what the new administration was looking for in a tax reform plan.  Today, Donald Trump stepped up to the podium and provided a few additional details.  Somewhat striking is that the only noticeable “change” from the initial reveal is that the lowest income tax bracket went from a 10% tax to a 12% tax.  All other frame-work remained the same.

Here are a few new details that Trump provided today with regard to your potential 2017 Federal Income Tax Brackets:

1. The Child Care Tax Credit will be going up from $1,000. (No news as to just how high)
2. An additional $500 Tax Credit for non-child dependents has been added (for the elderly, for example)
3. There is a high likelihood that a 4th tax bracket (above 35%) will appear for the wealthy.  No specific details were provided
4. Confirmed removal of the state and local tax deductions
5. Keeping the mortgage interest deduction and charitable deductions
6. Elimination of the estate (death) tax
7. A one-time repatriation tax of an unspecified amount.  This is an attempt to bring money kept overseas back to the United States
8. A corporate tax rate of 20%

As a reminder, this is not a finished product.  If tax reform is signed into law AND reverted back to 2017 it will likely be different than the numbers you see above.  How different is unknown but we’ll continue to publish updates as they’re presented.

Topics: Taxes

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via Finance Xpress