A new tax bill proposed by Republicans is being debated in the Senate this week but while it is sure to drum up a lot of headlines and controversy, for most average Americans, it can be hard to know what a bill like this actually means for them. Fortunately, The New York Times provided a concise, but informative explanation of what the new tax bill would mean for 25,000 middle-class families, which can give you a good idea of how this bill, which is still a work in progress, may directly affect you and the rest of your family.
One big takeaway from the Times analysis is that, at least in the immediate future, the proposed tax bill appears to lower taxes for middle-class families with kids. Parents with children are shown to be on the receiving end of some of the most generous tax cuts provided in the bill. For example, a married couple earning $71,800 per year would now be receiving an additional $1,500 in their tax refund. Having a second child would increase those savings to $1,880 each year.
But that’s not the only way parents might benefit from this potential tax bill, as it also offers an increase in child tax credit. The proposed bill doubles the child tax credit to $2,000 per child, which would further increase the tax cut for middle-class families. The benefits do begin to phase out once parents reach a certain combined income but for most families, this is a major win.
Of course, things are rarely as simple as they appear and the article explains that while this bill is certain to provide parents immediate relief from the burden of taxes, it will likely lead to a tax increase for most middle-class families in the long term. By 2027, only families earning $100,000 or more will see any real tax cuts, with two-thirds of middle-class households actually seeing their taxes increase.
So, while the short time benefits are certainly a win for new families, the longterm effect of the plan, as it stands now, negate any real gains. Only time will tell what actually passes through Senate.