The government’s new tax plan might threaten seniors. The AARP is raising some serious concerns about how Trump’s tax reform can lead to millions of seniors facing tax increases in the near future. They’ve also mentioned other provisions that might harm the elderly. Are you confused about Trump’s new tax bill? Then read our article below.
The New GOP Tax Plan: How Seniors Will Fare in the Next Few Years
In this article:
- New Tax Plan Brackets and Savings
- Tax Cuts…For Now
- Possible Tax Increases
- What Does This Mean for Seniors Paying Taxes?
- How Else Does the New Tax Bill Affect Seniors?
New Tax Plan Brackets and Savings
First, let’s start with the good news. For the next few years, most Americans might save an average of $500 per year on taxes. Some families might even save $2000 or more every year. The old tax brackets are also getting a shake-up since the new tax bill expands brackets. Before, if you earned $91,000 annually, you’d lose 28% of that to taxes. Now, you’d lose only 24% of that $91,000 annual income. People making around $38,000 find a special treat with the new tax plan since it slashes their tax burden from 25% to 12%. So, it seems like right now, the new tax plan is a win-win deal for everyone.
Tax Cuts…For Now
Unfortunately, the tax cuts for individual taxpayers aren’t forever. After 2025, individual tax cuts will expire, while corporate tax cuts remain permanent. So, most ordinary tax-payers will go back to paying the same amount they paid before the new tax plan went into effect.
Possible Tax Increases
The tax cuts will expire, but here’s some worse news. We might all suffer from higher taxes after 2025 since the new tax bill uses a different measure of inflation compared to the old one. As a result, tax brackets will grow wider and wider. People at the tail-end of brackets will be pushed into higher brackets, and they’ll pay higher percentages. This new method helps offset the loss from reducing corporate taxes.
What Does This Mean for Seniors Paying Taxes?
The new tax bill might hurt lower-and-mid-income taxpayers in the long run, including our senior citizens. The AARP estimates 1.2 million seniors are facing a tax hike right now. They also estimate the number will balloon to 5.2 million once the individual tax cuts end. So, Americans who’ll become seniors after 2025 face the risk of higher taxes.
How Else Does the New Tax Bill Affect Seniors?
Trump’s tax reform will lead to a trillion-dollar loss of revenue because of individual and corporate tax cuts. So, Medicare and other social welfare programs might receive less funding. This poses a grave threat to lower-class seniors, who rely on these programs for health insurance and other safety nets. These might hurt the elderly, but things aren’t completely bad.
The new tax bill contains some aspects that will still benefit our seniors. For example, it keeps the medical tax deduction, which was absent in an earlier version of the bill. It’s increasing the standard tax deduction and keeping the added deduction for senior citizens. Still, if you’re a senior citizen, you should be wary of how the revised tax plan affects you and your future.
The GOP’s new tax plan introduces a lot of changes in our lives. Some good, some bad. Seniors might get anxious about tax increases in their future, but don’t worry. There are still plenty of deductions for seniors and other ways to save your money from taxes. With the right knowledge and financial tips, you’ll have a lovely and secure retirement!
Do you still have questions about the new tax plan? Then comment them below!