There are still seven tax brackets, but they’ve been adjusted slightly: 10, 12, 22, 24, 32, 35, and 37 percent.
Compare those to the 2017 tax brackets: 10, 15, 25, 28, 33, 35, and 39.6 percent.
“For many people, this will end up being a tax reduction,” said John McCarthy, a certified public accountant andfounder of McCarthy Tax Preparation in Cincinnati.
While middle-income taxpayers will benefit, they’ll do so proportionately less than high earners. For example, a household earning $50,000 to $75,000 will receive an average tax cut of $870, while a household earning $500,000 to $1 million will receive an average tax cut of $21,240.
“This is definitely a plan that is going to help the higher-income individual and corporations,” said Anthony Badillo, a certified financial planner and chartered financial consultant. “The top tax rate is reduced. It may seem small, but it’s a big difference for high salaries.”
And don’t forget that these new tax rates will expire after 2025 and return to what they were in 2017, right when many tax credits and deductions for individuals will expire as well. This has the potential to suddenly increase your tax bill in 2026, depending on future legislation. In short, enjoy your lower tax burden for now, but be prepared for it to increase in several years.