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Here's What the 2018 Tax Brackets Will Be If the GOP Tax Bill Passes

By Matthew Frankel, CFP® - Updated Jan 2, 2018 at 4:55PM

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The final version of the bill keeps seven tax brackets with generally lower rates.

Over the past few months, the GOP's tax reform efforts have evolved at a rapid pace. The House of Representatives' version of the Tax Cuts and Jobs Act called for a reduction to just four tax brackets, while the Senate kept the number of brackets at seven and lowered most marginal tax rates.

We finally know what the joint version of the tax reform bill will look like, and while it makes a number of changes to the tax code, here's a rundown of what the individual tax brackets look like.

Black notebook with tax reform written in yellow letters on the cover.

Image source: Getty Images.

The proposed 2018 tax brackets

Marginal Tax Rate

Single

Married Filing Jointly

Head of Household

Married Filing Separately

10%

$0-$9,525

$0-$19,050

$0-$13,600

$0-$9,525

12%

$9,525-$38,700

$19,050-$77,400

$13,600-$51,800

$9,525-$38,700

22%

$38,700-$82,500

$77,400-$165,000

$51,800-$82,500

$38,700-$82,500

24%

$82,500-$157,500

$165,000-$315,000

$82,500-$157,500

$82,500-$157,500

32%

$157,500-$200,000

$315,000-$400,000

$157,500-$200,000

$157,500-$200,000

35%

$200,000-$500,000

$400,000-$600,000

$200,000-$500,000

$200,000-$300,000

37%

Over $500,000

Over $600,000

Over $500,000

Over $300,000

Data source: Joint Explanatory Statement of the Committee of Conference.

For comparison, here are the 2018 tax brackets that are set to take effect under our current tax law:

Marginal Tax Rate

Single

Married Filing Jointly

Head of Household

Married Filing Separately

10%

$0-$9,525

$0-$19,050

$0-$13,600

$0-$9,525

15%

$9,525-$38,700

$19,050-$77,400

$13,600-$51,850

$9,525-$38,700

25%

$38,700-$93,700

$77,400-$156,150

$51,850-$133,850

$38,700-$78,075

28%

$93,700-$195,450

$156,150-$237,950

$133,850-$216,700

$78,075-$118,975

33%

$195,450-$424,950

$237,950-$424,950

$216,700-$424,950

$118,975-$212,475

35%

$424,950-$426,700

$424,950-$480,050

$424,950-$453,350

$212,475-$240,025

39.6%

Over $426,700

Over $480,050

Over $453,350

Over $240,025

Data source: IRS.

A few important things to notice

First, notice that the lowest two tax brackets use income ranges that are almost identical to the current-law brackets, just with a lower rate of 12% for the second bracket. Since the median American household is currently in the 15% tax bracket, this should have the desired effect of lower taxes for middle-income households.

Furthermore, notice that the final version of the bill eliminates the so-called marriage penalty, except for the highest earners. In other words, with the exception of the highest two tax brackets, the income thresholds for singles are exactly half of those for married couples. Eliminating the marriage penalty, especially for middle-income households, is one thing President Trump discussed in his campaign tax plan. And for most Americans, it looks like this will be the case.

Finally, while the head of household filing status won't be eliminated, as it was in President Trump's campaign tax plan, it would become less beneficial for higher-income filers. As you can see in the current tax brackets, all of the head of household income ranges are significantly higher than the corresponding ranges for singles. On the other hand, in the new proposal, aside from the lowest three brackets, the head of household income ranges are identical to those for singles.

Will you save money?

It's difficult to say whether the tax reform bill will save you money or not, just based on the proposed tax brackets. There are simply too many other changes that could affect you.

For example, the bill also calls for nearly doubling the standard deduction while eliminating the personal exemption. This could be a negative factor for certain households, especially those that currently itemize deductions.

However, it's fair to say that most Americans would see their tax bills go down if the final version of the tax reform bill is signed into law.

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