The House of Representatives passed a bill rewriting the tax code for the second time on Wednesday, leaving many wondering what the new tax code will mean for their wallets.
There are four provisions that could affect the way Arkansans do their taxes.
“We’ve said all along that we’re going to cut taxes and we’re going to make it fair and simple and I think we’ve delivered on that promise,” said Rep. Steve Womack of District 3.
Womack praised the newly approved tax plan but many Americans aren’t sure what it will mean for their families.
“I don’t think that this is going to have a big impact, it’s not going to have significant impact on people’s Christmases this year,” said Joel Doegler, a financial counselor with Credit Counseling of Arkansas.
One of the main changes in the new plan is that it will increase the child tax credit from $1,000 to $2,000, but that’s just the start.
Under the new plan the standard deduction for both single filers and joint filers will nearly double. Single filers would see their deduction increase from $6,500 a year to $12,000 and joint filers would see theirs go up from $12,000 to $24,000.
The plan will also lower tax rates across income levels. A single person who makes $25,000 a year will see their tax rate drop from 15% to 12%. For a single person making $50,000, the rate drops from 25% to 22%. For someone making $100,000, it’ll drop from 28% to 24%.
Doegler believes the affect on average Arkansans will be minimal.
“Well for a lot of people, the low to moderate income folks that we service, I don’t think they’re going to be seeing a huge tax break by any means,” Doegler said.
Under the current tax plan, taxpayers can deduct all of their state and local taxes from their federal income tax. The new plan will cap that deduction at just $10,000.
President Trump says he plans to sign the bill before Christmas, which means it would go into effect on January 1. Americans won’t see a change in their taxes until the spring of 2019.