Whatever you think of President Donald Trump, his racism, his behavior towards women and his unpleasant demeanor, you might have been shocked, or will be in shock, when the IRS's new withholding tables take effect at your workplace. Those tables contain new tax rates, created by Trump's massive new tax cut, that should put a little more cash in your pocket in 2018.
While the vast majority of Trump's tax cut — 83 percent, according to the Tax Policy Center — is still headed to the wealthiest 1 percent of Americans, middle-income earners should feel a little bump in their checks when their employers start using the new rates, as they are required to do by Feb. 15.
Because every little bit helps, let's take a look at what Trump's tax cut will mean for a married Dallas couple making $45,215, the Census Bureau's most recent estimate of the city's median household income. For the purposes of this little exercise, we're going to assume that the couple in question claims two withholding allowances, gets paid twice a month and doesn't have anything else withheld before taxes. We're also treating two paychecks as one combined check, for clarity.
In 2017, the couple in question would've paid about $139 in federal income taxes on about $1,884 in gross income on each of their 24 annual checks.
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This year, claiming the same two deductions, the same couple can expect to pay about $111 in income taxes on the same $1,884 in wages, thanks to a small increase in withholding allowance value and the couple's income being taxed at a maximum rate of 12 percent, rather than 15 percent, as it was in 2017. Multiply $28 by 24 and you get $672, about the savings amount for a married couple in Dallas making the city's median household income without kids.
While the corporate tax rate cut in Trump's bill — from 35 percent to 21 percent — is permanent, the individual rate changes going into effect this winter are set to expire in 2025.