Will you be paying US taxes in 2018? If so, this interactive model created by JPM is for you.
The Tax Cuts and Jobs Act (TCJA), which was signed into law by Donald Trump this week, is projected to reduce individual tax payments by over $1 trillion over the next 10 years, more than triple the tax cut impact on businesses and corporations.
However, the impact on individual taxpayers will differ, and depends on their income and deduction characteristics.
The bill entails changes to marginal tax rates, tax bracket levels, itemized deductions, the child tax credit and the Alternative Minimum Tax, and creates a new approach to pass through entity taxation.
To allow everyday Americans from all walks of life (as well as certain subsets of Wall Street workers) to estimate the impact of the TJCA on their tax burden, JPMorgan developed an interactive website to give you some sense for how the changes might impact your combined Federal and state effective income tax rate.
Simply choose from among the taxpayer types which include:
- Salaried workers
- Hedge fund managers
- Private Equity Principals
- Trust Beneficiaries
- Pass Through Entity: Owners
- Pass Through Entity: Investors
- Pass Through Entity: Services
... and whether your itemized deductions are high or low. If you are a pass through entity owner or investor, you will need to choose whether the pass through entity has high or low wage intensity. The chart will then display effective tax rates under the current system and under the TCJA across a range of total income, such as the one below.
Click on the ‘View’ links for more information on the menu selections and to be taken to the interactive JPM website.
As an added feature, the website will allow you to calculate the incentive for any given taxpayer type to move from a high tax state (10% state income tax, 2% property tax) to a low state tax (no state income tax, 1% property tax).