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Tax Scenarios Under the New Legislation
2018 Whole Ball Of Tax
Scenario 1
Single parent, age 35, 4 children ages 5 to 15, earnings $35,000, after school program expenses $4,000, renting, residing in Massachusetts (assuming $4,000 in child care expenses)
| Old Law | New Law | Difference | |
| Taxable Wages | $35,000 | $35,000 | $0 |
| Adjusted Gross Income | $35,000 | $35,000 | $0 |
| Standard Deduction | ($9,550) | ($18,000) | $8,450 |
| Personal Exemptions | ($20,750) | $0 | ($20,750) |
| Taxable Income | $4,700 | $17,000 | $12,300 |
| Tax | $470 | $1,768 | $1,298 |
| Child Care Credit | ($470) | ($1,000) | $530 |
| Child Tax Credit | ($4,000) | ($5,643) | $1,643 |
| Earned Income Credit | ($3,011) | ($3,011) | $0 |
| Tax Due (Refund) | ($7,011) | ($7,886) | ($875) |
Scenario 2
Married couple, ages 40, 2 children ages 8 and 10, earnings of $45,000 and $30,000, living in California, after school program expenses $3,000, mortgage interest $18,000, property taxes $12,000
| Old Law | New Law | Difference | |
| Taxable Wages | $75,000 | $75,000 | $0 |
| Adjusted Gross Income | $75,000 | $75,000 | $0 |
| Mortgage Interest Deduction | ($18,000) | ($18,000) | $0 |
| Real Estate & Sales Taxes | ($13,251) | ($10,000) | ($3,251) |
| Personal Exemptions | ($16,600) | $0 | ($16,600) |
| Taxable Income | $27,149 | $47,000 | $19,851 |
| Tax | $3,120 | $5,259 | $2,139 |
| Child Care Credit | ($600) | ($600) | $0 |
| Child Tax Credit | ($2,000) | ($4,000) | $2,000 |
| Tax Due (Refund) | $520 | $659 | $139 |
Scenario 3
Married couple, ages 50 and 46, 2 children ages 19 and 21 in college, tuition and fees $35,000, earnings $200,000 and $20,000, net long-term capital gains $3,000, charitable contributions $5,000, mortgage interest $18,000, property taxes $22,000, 401(k) contributions $24,000, living in Michigan
| Old Law | New Law | Difference | |
| Taxable Wages | $196,000 | $196,000 | $0 |
| Capital Gains | $3,000 | $3,000 | $0 |
| Adjusted Gross Income | $199,000 | $199,000 | $0 |
| Mortgage Interest Deduction | ($18,000) | ($18,000) | $0 |
| Real Estate & Income Taxes | ($29,778) | ($10,000) | ($19,778) |
| Charitable Contributions | ($5,000) | ($5,000) | $0 |
| Personal Exemptions | ($16,600) | $0 | ($16,600) |
| Taxable Income | $129,622 | $166,000 | $36,378 |
| Tax | $23,413 | $28,189 | $4,776 |
| Alternative Minimum Tax | $379 | ($379) | |
| Child Tax Credit | ($0) | ($1,000) | $1,000 |
| Tax Due (Refund) | $23,792 | $27,189 | $3,397 |
Scenario 4
Retired couple, ages 72 and 70, $40,000 in Social Security, $25,000 in pension income, no dependent children, living in Florida, no mortgage, property taxes $12,000, charitable contributions $5,000
| Old Law | New Law | Difference | |
| Taxable Pension | $25,000 | $25,000 | $0 |
| Taxable Social Security | $6,850 | $6,850 | $0 |
| Adjusted Gross Income | $31,850 | $31,850 | $0 |
| Real Estate & Sales Taxes | ($12,908) | ($0) | ($12,908) |
| Charitable Contributions | ($5,000) | ($0) | ($5,000) |
| Standard Deduction | ($0) | ($26,600) | $26,600 |
| Personal Exemptions | ($8,300) | ($0) | ($8,300) |
| Taxable Income | $5,642 | $5,250 | ($392) |
| Tax | $564 | $525 | ($39) |
| Tax Due (Refund) | $564 | $525 | ($39) |
Scenario 5
Married couple, ages 55, no dependent children, earnings $700,000 all by one spouse, mortgage interest $20,000, property taxes $25,000, living in Illinois, net long-term capital gains $20,000, charitable contributions $40,000, 401(k) contribution $24,000. Business paid $200,000 in wages. Health Insurance costs of $7,000.
| Old Law | New Law | Difference | |
| Business Income | $700,000 | $700,000 | $0 |
| Capital Gains | $20,000 | $20,000 | $0 |
| Self Employment Tax Deduction | ($17,335) | ($17,335) | $0 |
| Self Employed Health Ins. Deduction | ($7,000) | ($7,000) | $0 |
| Retirement Plan Deduction | ($24,000) | ($24,000) | $0 |
| Adjusted Gross Income | $671,665 | $671,665 | $0 |
| Real Estate & Income Taxes | ($56,781) | ($10,000) | ($46,781) |
| Mortgage Interest | ($20,000) | ($20,000) | $0 |
| Charitable Contributions | ($40,000) | ($40,000) | $0 |
| Sec. 68 Reduction | $10,550 | ($0) | $10,550 |
| Personal Exemptions | ($0) | ($0) | $0 |
| Qualified Bus. Inc. Deduction | ($0) | ($100,000) | $100,000 |
| Taxable Income | $565,434 | $501,665 | ($63,769) |
| Income Tax | $164,136 | $123,962 | ($40,174) |
| Self Employment Tax | $34,669 | $34,669 | $0 |
| Net Investment Income Tax | $724 | $749 | $25 |
| Additional Medicare Tax | $3,568 | $3,568 | $0 |
| Tax Due (Refund) | $203,097 | $162,948 | ($40,149) |
Scenario 6
Divorced man, age 60, $100,000 income, $20,000 in alimony, one child age 20 in college with tuition of $20,000 which he pays (providing over ½ of support), renting, charitable contributions $4,000, 401(k) contribution $24,000 living in Texas
| Old Law | New Law | Difference | |
| Taxable Wages | $76,000 | $76,000 | $0 |
| Less Alimony | ($20,000) | ($0) | ($20,000) |
| Adjusted Gross Income | $56,000 | $76,000 | $20,000 |
| Standard Deduction | ($9,550) | ($18,000) | $8,450 |
| Personal Exemptions | ($8,300) | $0 | ($8,300) |
| Taxable Income | $38,150 | $58,000 | $19,850 |
| Tax | $5,043 | $7,308 | $2,265 |
| Education Credit | ($2,500) | ($2,500) | ($0) |
| Child Tax Credit | ($0) | ($500) | $500 |
| Tax Due (Refund) | $2,543 | $4,308 | $1,765 |