New tax cuts go into effect this month


New tax cuts go into effect this month

By Tony Baker - abaker@dailyadvocate.com



Congressman Warren Davidson (R-Troy) released a statement Tuesday concerning adjustments made to tax withholding rates by the IRS as a result of last year’s passage of the Tax Cuts and Jobs Act.

Congressman Warren Davidson (R-Troy) released a statement Tuesday concerning adjustments made to tax withholding rates by the IRS as a result of last year’s passage of the Tax Cuts and Jobs Act.


Courtesy photo

WASHINGTON, D.C. — Congressman Warren Davidson (R-Troy) released a statement Tuesday concerning adjustments made to tax withholding rates by the IRS as a result of last year’s passage of the Tax Cuts and Jobs Act.

“The good news keeps coming for Ohio families,” Davidson said in his prepared statement. “Nine out of every ten workers should see a bump in their take-home pay thanks to the Tax Cuts and Jobs Act. Working families in the Eighth District should see paycheck changes this month.”

Passed in 2017, and championed by Congressional Republicans and President Donald Trump, the Tax Cuts and Jobs Act amended the Internal Revenue Code, ostensibly with the goal of reducing tax rates for businesses and individuals. Controversially, the bill also eliminated the health insurance mandate specified by the Affordable Care Act passed under President Barack Obama, though this provision will not take effect until 2019.

According to a report by the Congressional Budget Office, tax cuts for individuals would last until 2027, while corporate tax cuts specified in the act would be permanent.

A notice from the Internal Revenue Service included with Representative Davidson’s statement specifies that changes in tax withholding rates set forth in accordance with the new law are to be implemented no later than February 15. Income tax rates for nonresident aliens working in the United States will rise, while Medicare tax rates for wages in excess of $200,000 a year will also increase.

The tax rate on supplemental wages has dropped, however, from 25 percent prior to 2018 to 22 percent under the new plan. Supplemental wages include bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, and retroactive pay increases. The standard deduction has also been raised, such that most households are expected to benefit from taking the standard, as opposed to itemizing their deductions.

According to an analysis on the website Forbes.com, about 45 percent of American households fall into the “low income” bracket, meaning they pay no federal income tax and will see minimal changes under the new law. Of the remaining 55 percent, those earning more than $500,000 a year will see the greatest savings, while those who make between $200,000 and $500,000 will “break even,” or perhaps see a slight tax increase, in high-taxed states like New York and California, with those in other states faring better. Those in the middle class stand to see their tax bill decrease by about three to four percent..

The new IRS deduction tables are available at irs.gov.

Congressman Warren Davidson (R-Troy) released a statement Tuesday concerning adjustments made to tax withholding rates by the IRS as a result of last year’s passage of the Tax Cuts and Jobs Act.
https://www.dailyadvocate.com/wp-content/uploads/sites/34/2018/02/web1_N1711P59004H.jpgCongressman Warren Davidson (R-Troy) released a statement Tuesday concerning adjustments made to tax withholding rates by the IRS as a result of last year’s passage of the Tax Cuts and Jobs Act. Courtesy photo
New tax cuts go into effect this month

By Tony Baker

abaker@dailyadvocate.com

The writer may be reached at 937-569-4315. To join the conversation and get updates on Facebook, search Advocate 360. For more features online, go to dailyadvocate.com

The writer may be reached at 937-569-4315. To join the conversation and get updates on Facebook, search Advocate 360. For more features online, go to dailyadvocate.com