Happy New Year! This is your year! Here's how big your raise is today...
Bottom Line: We've got a pretty great one-two punch of tax cuts and raises kicking in today. It's been a long time since we had news this good to start a year! How much more money's going to be in your pocket this year?
Let's start with where we ended 2017. I've got all of the latest info ready for you. In December the Bureau of Labor Statistics showed that the average weekly earnings for those employed equaled the equivalent of $47,631. That's up 3.2% year over year! That means that the average Floridian is making about $1,500 more today, to start 2018, compared to this time last year. And we're just getting started because the new tax law kicks in today and here's what it means to you...
Nearly all Floridians who pay federal income tax will save significant money (and those who wouldn't would be the absolute wealthiest with very specific circumstances). Here are a few keys to keep in mind.
The new tax law is now effectual (no impact on your 2017 taxes)
While the new rates take effect right away it's likely to take additional time for the feds & employers to reflect withholding changes in your paycheck (this means that you'll likely not see the net impact immediately in your paycheck though it'd be accounted for when you file your taxes), most estimates are the employers and the feds will have made the withholding changes by February
The individual mandate for healthcare is eliminated - so you don't have to have health insurance or face the additional tax
So, what does it mean to you?
There are still seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37% (all but the 35% bracket being a reduction in tax rate)
There is a near doubling of the standard deduction (Along with other changes in the plan the net effect would be much simpler tax filing for most who currently itemize. 32% of Americans currently itemize. That would likely drop to only around 6%)
So, there's a far better than not chance that if you had to itemize before - you'll no longer have to worry about any of that come next year. If you're in doubt touch base with your accountant or tax prep service. Let's talk money.
With the new median income at $47,631 and the new tax law in place and using standard deductions...You would have paid $6,060 in federal income taxes last year. With the new law you'll pay...$4,086. That's a savings for the average Floridian of $1,974. That's 4.1% more money in your pocket! Congrats! Once you put it together with the year over year increases in earnings - you're likely to have 7%+ more to show for your work today compared to a year ago! That's the best start to a new year since the Reagan tax cuts kicked in just over 30 years ago.
Happy new year! There's plenty of reason to celebrate - especially once you see how much more you'll get to keep in your paycheck.