One of the tax proposals put forth by U.S. President Donald Trump would impact the great majority of Americans. Trump is attempting to implement a radical new proposal that would allow many Americans to keep more of their hard-earned money and pay fewer taxes. Several tax proposals have been proposed by the Trump administration, including exemptions from Social Security, overtime, and tip taxes, as well as from federal income taxes for anyone making under $150,000.
Trump’s proposal will impact those Americans who pay taxes and earn less than $150,000
Nearly every American would profit from the money that goes directly into their pockets since, according to the U.S. Census Bureau, 93% of Americans over the age of 15 earned less than that amount in 2022. Americans would continue to pay Social Security and Medicare, as well as state and local taxes, under the proposal. Trump said that rather than taxing our citizens to benefit foreign countries, we should impose tariffs on foreign countries to enrich our citizens. The Director of Economic Analysis at SmartAsset, Jaclyn DeJohn, told Newsweek that if federal taxes were eliminated, the wealthiest people would benefit more.
According to DeJohn, an individual in the 24% tax bracket will benefit more than those in the 22% tax bracket, who will then benefit more than those in the 12% or 10% income bracket, since federal marginal tax rates rise as income rises. For instance, a $149,000 income would result in an estimated $25,300 in federal tax savings or an annual savings of almost 17.0%. At an effective rate of roughly 8.0%, a person making $49,000 would save roughly $3,896 in federal taxes annually. However, the precise amount you would save would vary depending on your location, income, and local tax laws. Numerous internet calculators, such as SmartAsset, IRS, and JacksonHewitt.com, can assist you in determining the approximate amount.
IRS taxes: Average tax refunds are up 7.5% until now
This tax season, the Internal Revenue Service is dealing with several well-publicized issues, including job cuts. However, early tax filers are currently receiving a consistent flow of tax returns in their mailboxes and bank accounts. To date, the National Treasury Employees Union has reported that 153 probationary IRS employees in Michigan who were represented by the union have lost their jobs. The layoffs occurred during the tax season this year. According to a statement by Doreen Greenwald, president of the National Treasury Employees Union, since a large portion of the IRS workforce is located outside of the Washington, D.C., area, these layoffs are negatively impacting middle-class families and their local economies in every state.
Moreover, the NTEU contends that the layoffs are arbitrary and illegal, and it will continue to battle until every wrongful firing is overturned. However, tax season continues as many IRS employees remain on the job and tax preparers continue to collect information from clients and submit 1040s. The most recent IRS statistics show that during the first four weeks through February 21, the average federal income tax refund was $3,453. Through February 23, 2024, that represents a 7.5% increase above the tax season average of $3,213. Federal income tax refunds have totaled over $102.2 billion so far, a 10% increase over the same four-week period last year.
Over 29.6 million refunds have been granted by the IRS, a 2.3% increase from the previous year. The IRS began receiving and processing 2024 federal income tax returns on January 27, marking the start of the tax season. Still, several specialists remain baffled by one set of figures, and many individuals who may have filed early in the season are not doing so this year. However, taxpayers are concerned about potential increased taxes, potential retroactive tax cuts from President Trump’s campaign, and a new 1099-K, but experts believe this is unlikely. They also worry about a new 1099-K that appears unexpectedly.
