The news has been covering many laws recently, but none are more pertinent in my industry than the proposed GOP tax bill. The truth is: whether the House bill or the Senate bill passes, there are big changes coming that will affect your tax returns. Here are some of the biggest possible changes.
Income tax rates are going to decrease under the tax plan, so one bonus you’ll see every month is an increase in your paycheck. Almost every tax bracket will decrease around 2% on average, which is more substantial than you’d think. One way I like to look at it is the tax cut will essentially pay for many people’s health insurance.
Speaking of healthcare, one huge change is going to effect that could lessen the burden on many families. The tax plan is going to eliminate the penalty for not having health insurance. This is going to be huge for people who work full-time, but whose employers refuse to offer insurance. Now, these individuals will not have to choose between shelling out $300 for subpar insurance or taking a hit.
Real Estate Deductions
If you own a house or are looking to buy a house, the current seller’s market may swing to a buyer’s market after some proposed changes. While you can currently deduct interest payments on properties up to $1 Million, you soon may have more limitations (both the House and Senate bills restrict these deductions in some form). Furthermore, housing prices are expecting to drop significantly due to this bill. If they drop even 10%, we may see more Millennials entering the market to take advantage of a lower down payment or buy a nicer house now that the price has dropped into their range.
Big Company Tax Breaks
A huge change that has some people screaming is the tax breaks on companies. Let me just explain why this might not be a bad thing. Some companies have already said that they will give bigger bonuses, pay increases, and more to their employees when this bill passes. Companies want to treat their employees well to maintain high retention, better productivity, and overall better morale. I understand that some companies will not operate this way, but many of the big players who are already heavily-invested in their employees’ happiness will contribute a little extra to their wallets.
Overall, there will be big changes in the tax bill. Whether it is good or bad for you depends on your perspective, but for most people, it will be a mixed bag. I am optimistic, however, that everything will turn out positively in the end.