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What the Proposed Tax Cuts Might Mean for You

In the past, some of us reached for our credit card without much thought.  Now, many of us are altering those practices and thinking twice before making certain purchases.  The reason?   We are deeply mindful of our personal finances given the current economic crisis confronting our nation.

As we all know, there will soon be a change in presidential leadership.  And with that change will be a different tax plan.  “Will my tax rate be lower?” you might ask.  Let’s examine what the proposed federal tax cuts could indicate for you or your loved ones.

If you make less than $19,000, your average tax saving savings could be about $567.

If you make $19,000 to $37,600, your tax savings could be about $892.

If you make $37,600 to $66,400, your savings could be about $1,118.

If you make $66,400 to $111,600, your savings could be about $1,264.

If you make $111,600 to $161,000, your saving could be about $2,135.

If you make $161,000 to $227,000, your savings could be about $2,796.

If you earn more than $227,000, the dynamics begin to change.  The tax plan then appears to reflect the Clinton-era 39% rate.  For example, if you make between $227,000 and $603,400, you could pay an additional $121 in taxes.  If you make between $603,400 and $2.87 million, you might pay an additional $93,709.  If you make more than $2.85 million, then I think most of us would like to know what you do!  Ha, ha.  Anyway, the numbers mentioned are estimates only and in no way are meant to represent exactness.

NOTE:  The above figures were taken from the Boston Sunday Globe Parade Magazine, Sunday, October 12, 2008 (page 6).

Oh, and a final tidbit regarding the new plan?  Income tax for seniors making less than $50,000 will be eliminated.  Since many seniors struggle on a limited income, let’s hope that is one proposal that becomes reality!