Under the new tax plan, people pay more taxes and get more cash back.

It is extremely counterintuitive, but it is pretty much what they did.  You pay 10k or whatever in taxes instead of 8k or 9k, and after the new system of credits and revised deductions is applied, you end up with more money in your pocket.  This is primarily true for parents, married ones  with children under 18 more so than married with college aged kids (unless the 529 stuff is adopted) and those more so (due to higher income) than single parents.

The basic structure is less true for high-earning married couples without kids and high-earning singles in particular.

I was hoping to do a post or two of examples, but I am not likely to have time for that.  If I do get time, I will run through some typical examples.

https://www.marketwatch.com/graphics/2017/trump-tax-calculator

This calculator was just put up.  It overstates tax paid by EITC eligible people and also leaves out some common deductions and doesn’t apply the tax credits properly, but it’s a decent starting point and you can tweak the finished numbers from there.

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5 thoughts on “Under the new tax plan, people pay more taxes and get more cash back.

      • The pay more, get more back later thing is to keep people from immediately noticing when the tax cuts expire. They will be used to living on less and just get smaller refunds.

        I don’t think that the 529 expansion is going to be nearly as beneficial to most parebts as being able to deduct the average cost of child care. That might’ve actually encouraged mothers to stay at home with their children. The 529 expansion is nice but most parents aren’t paying for private school and probably won’t start because of this.

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