Will you soon be getting more take-home pay from work?
During the State of the Union address Tuesday night, President Trump made reference to the benefits of the new tax laws passed by Congress last month.
In fact, many New Jerseyans are expected to start seeing those benefits show up in the form of a bigger paycheck starting next month.
The U.S.Treasury Department has released new withholding tables employers can use as a guideline that are based on the new tax laws. Some tax experts estimate 80 to 90 percent of workers will see at least a small increase in their take-home pay when those guidelines are implemented no later than Feb. 15.
Peter Greco, the chief tax researcher at the CSI Group, says many people will get more money for a very simple reason – their tax liability will be less in 2018 than it was last year.
“For example, a married person that makes $50,000 will be saving $1,000 a year.”
He noted instead of getting the extra money at the end of the year, workers will be receiving it on a weekly or biweekly basis in their paycheck.
“Someone that makes $50,000 a year, let’s say $2,000 every two weeks, the way we’ve computed it, it comes out to $42.16 extra.”
If you earn more, the benefit will grow.
Greco said for somebody that earns “$2,000 a week or an income of about $98,000, they’ll be saving about $119.28 every two weeks.”
But if you’re earning a lot money, say between $200,000 and $400,000 a year, the predictions get a lot trickier.
Because the child tax credit has been doubled for most people, those with high salaries who have three or four kids may wind up saving a lot of money on their taxes.
“Someone that now makes $250,000 with three children, they will be getting $6,000 of child tax credit.”
He also pointed out a high-wage earner with three kids living in a rental unit could wind up saving around $10,000 a year. But someone with a big mortgage paying a lot in property taxes could wind up paying more in taxes in part because they can no longer deduct more than $10,000 in property taxes on their federal return.
But in general, Greco says “most people will be receiving more on their paycheck because of this new law.”