These tax breaks would also add $5.8 trillion to the federal debt over the next decade.
Trumphas proposedeliminating the tax on Social Security benefits from income taxes.
This proposed tax cut wouldn’t benefit you if you don’t pay taxes on your SSI benefits.
Taxes on Social Security benefits are paid into the Social Security department.
Theyare not used to fully fund the benefits you receive, so eliminating taxes could hurt the program overall.
The fund that covers Social Security benefits is expected to run out of money in the next decade.
TheTax Foundation also estimatesthis change alone would boost the federal deficit by $1.6 trillion over a decade.
Note:This tax cut would not impact the Social Security payroll tax workers pay.
Anyone earning income outside of Social Security benefits would still pay into the Social Security fund.
One of Trump’scampaign proposalspromised to end taxes on overtime pay.
Overtime pay is taxed at your regularincome tax rate.
When you receive overtime pay, your overall paycheck is larger, which affects your overall tax contribution.
Higher pay can also push you into a higher tax bracket and change your overall tax rate.
If this proposal were to pass, it would likely exempt overtime hours from the regular income tax rate.
Eliminating taxes on overtime pay could significantly bump up your paycheck.
Bowman believes that it could also eliminate uncertainty around working overtime.
Stop taxing tips
Another potential economic relief to workers isTrump’s proposed elimination of taxes on tips.
The idea is that any income service workers receive as tips would no longer be subject to income tax.
Service workers are currently required to report and pay taxes on any cash tips they earn.
If you earn most of your income through cash tips, this tax change could lower your tax burden.
The lawmade tax filing easierfor many Americans by lowering overall tax rates.
Keeping the TCJA in place would keep taxes lower for many households and businesses.
“It’s a simplification of the tax system,” Bowman said.
“We’ve all gotten used to it.”
A larger CTC could help lower tax burdens for millions of families.
If this law isn’t extended, the CTC would drop to a maximum of $1,000 per child.
This expansion had a significant impact on millions of families and dropped thechild poverty level to a record low.
A $5,000 per child increase could provide much-needed relief for millions of families.
It’s unclear ifthe Trump administration will push for an expanded CTC.
If it does, passing the law would require congressional approval.
Like other tax breaks, expanding the Child Tax Credit would also lead to greater federal deficits.
On the campaign trail, Trump indicated he would consider repealing the Biden administration’sInflation Reduction Act.
The$7,500 tax credit for electric vehiclesis in jeopardy.
Trump’stransition team has said they would eliminatethis tax break.
Experts don’t expect a Republican White House to extend this law.
What does Trump’s tax plan mean for you?
In general, expect tax rates to stay low under the new Trump administration.
We’ll keep you updated on any new tax changes that could impact your tax bill or refund.
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