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What Does the Tax Reform Bill Mean for Low-Income Earners?

Aside from lowering the statutory corporate tax rate from 35% to 21%—perhaps the most well-known facet of the tax plan—this bill lowers several individual rates and makes key changes to the tax code that affect low-income earners.

The tax reform bill does not reduce the number of individual brackets, but it does lower the rates for five of the seven:

Old Tax Brackets

Single FilersTaxFiling JointlyTax
OverBut not over%OverBut not over%
$0$9,32510%$0$18,65010%
$9,325$37,95015%$18,650$75,90015%
$37,950$91,90025%$75,900$153,10025%
$91,900$191,65028%$153,100$233,35028%
$191,650$416,70033%$233,350$416,70033%
$416,700$418,40035%$416,700$470,70035%
$418,40039.6%$470,70039.6%

New Tax Brackets

Single FilersTaxFiling JointlyTax
OverBut not over%OverBut not over%
$0$9,52510%$0$19,05010%
$9,525$38,70012%$19,050$77,40012%
$38,700$82,50022%$77,400$165,00022%
$82,500$157,50024%$165,000$315,00024%
$157,500$200,00032%$315,000$400,00032%
$200,000$500,00035%$400,000$600,00035%
$500,00037%$600,00037%

Other Important Tax Changes

While personal exemptions are eliminated, the standard deduction is increased from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for married filing joint filers. Another change that’s likely to impact low-income taxpayers is the adjustment to family tax credits.

The Child Tax Credit (CTC) is being doubled from $1,000 to $2,000, and the refundable portion will be increased from $1,100 to $1,400, which will likely result in lower-income families seeing CTC-related refund dollars.

Source: https://taxingsubjects.com/our-blog/taxnews/tax-reform-bill-heads-presidents-desk/

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