How your tax bracket could change under the Senate's tax plan, in two charts

  • Income tax brackets could change in 2018 if tax reform legislation is enacted under President Donald Trump.
  • The Senate's tax plan proposes keeping seven tax brackets but changes the income ranges.
  • The bill proposes eliminating the personal exemption and increasing the standard deduction.

Senate Republicans appear to be inching closer to passing their huge tax overhaul.

The most concrete sign that Republicans were making progress came in the Senate Budget Committee on Tuesday, where the bill passed on a party-line vote of 12 to 11. Two GOP senators on the committee, Ron Johnson and Bob Corker, ended up voting for the bill after saying on Monday they would vote against it.

But political and procedural stumbling blocks remain as Republicans try to clear their bill through the full Senate.

In the meantime, Business Insider put together two charts showing how the Senate's tax plan could change federal income-tax brackets in 2018 compared with those in 2017.

First, for single filers:

single filers senate tax plan brackets(Andy Kiersz/Business Insider)

And second, for joint filers:

married filers senate tax plan brackets(Andy Kiersz/Business Insider)

Under the Senate's plan, there would still be seven federal income brackets but at slightly lower rates and adjusted income ranges. The brackets proposed are 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%.

About 70% of Americans claim the standard deduction when filing their taxes, and their paychecks will almost certainly increase — albeit slightly — if tax reform passes.

In 2017, the standard deduction for a single taxpayer is $6,350, plus one personal exemption of $4,050.

The Senate proposal would combine those into one larger standard deduction for 2018: $12,000 for single filers and $24,000 for joint filers.

More from Business Insider:

What is Form 8958: Allocation of Tax Amounts Between Certain Individuals in Community Property State

Several states have "community property" laws, which say that most income earned and most assets acquired during a marriage are the equal property of both spouses, regardless of whose name is on the check or the title. This can sometimes create additional work for couples filing separately for federal income taxes. The Internal Revenue Service (IRS) created Form 8958 to allow couples in community property states to correctly allocate income to each spouse that may not match what is reported to the IRS.

Read More

Brought to you by TurboTax.com

What Is the IRS Form 8863?

If you plan on claiming one of the IRS educational tax credits, be sure to fill out a Form 8863 and attach it to your tax return. These credits can provide a dollar-for-dollar reduction in the amount of tax you owe at the end of the year for the costs you incur to attend school. Before preparing the form, however, make sure that you satisfy the requirements of an eligible student.

Read More

Brought to you by TurboTax.com

Getting Divorced

If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.

Read More

Brought to you by TurboTax.com

Tax Tips for Bitcoin and Virtual Currency

Virtual currency like Bitcoin has shifted into the public eye in recent years. Some employees are paid with Bitcoin, more than a few retailers accept Bitcoin as payment, and others hold the e-currency as a capital asset. Recently, the Internal Revenue Service (IRS) clarified the tax treatment of Bitcoin and Bitcoin transactions.

Read More

Brought to you by TurboTax.com
Read Full Story