How the Republican Tax Plan Would Affect These 5 Households

The Tax Cuts and Jobs Act was released by GOP leaders on Thursday, and Americans finally got some long-awaited details on what a tax reform package might look like. The bill is likely to change significantly before it's signed into law, but let's take a look at how it could potentially affect certain American households.

Single taxpayers who don't itemize deductions are winners under the Tax Cuts and Jobs Act. Under current law, this taxpayer would be entitled to a $6,500 standard deduction and a $4,150 personal exemption, for a total of $10,650 deducted from their taxable income. The Tax Cuts and Jobs Act eliminates personal exemptions but offers single taxpayers a $12,200 standard deduction, which is an additional $1,550 of income that's excluded from taxation. For a single filer earning $45,000 a year, this would reduce their taxable income to $32,800, rather than $34,350 under current tax law.

According to the 2018 tax brackets as they stand now, a taxable income of $34,350 would put this taxpayer in the 15% marginal tax bracket, resulting in a 2018 tax bill of $4,676.25. Under the proposed changes, a single taxpayer with $32,800 in taxable income would be in the 12% tax bracket, which would apply to all of their income, making for a tax bill of $3,936.

Source: Fool.com