Tax wonks have begun a deep dive into the GOP'

Tax wonks have begun a deep dive into the GOP's new bill, and the details on what the proposed overhaul means to you are beginning to emerge.

Lawmakers released the Tax Cuts and Jobs Act on Thursday. The legislation aims to simplify the tax code by slashing itemized deductions and cutting down the number of income tax brackets.

For businesses, Republicans are also seeking to reduce the federal corporate tax rate to 20 percent from its current maximum level of 35 percent.

"This combination of raising the standard deduction and eliminating itemized deductions will make tax preparation easier, but I'm not sure it will be a savings for higher income people," said Tim Steffen, director of advanced planning at Robert W. Baird & Co. in Milwaukee.

Even families who are middle income may miss out.

"There will be winners and losers in tax reform, and as it stands now, I worry that the benefits that are claimed to go to middle-income households won't play out," said Bill Hoagland, senior vice president at the Bipartisan Policy Center.

Here's how the bill will affect you if it moves forward without major changes.

Rising standard deductions

Losers: Low income filers with children

Winners: Low-to-middle income households

Republicans want to raise the standard deduction to $24,400 for married couples who file jointly and $12,200 for single filers.

That's up from $12,700 for married couples and $6,350 for individuals.

Yet this change isn't as generous as it appears, according to Stan Veliotis, associate professor and director of the Center for Professional Accounting Practices at Fordham University in New York.

Under the current system, a single filer can take a standard deduction of $6,350 and a personal exemption of $4,050. That equates to $10,400 in tax savings compared with the proposed $12,000 standard deduction for singles.

Further, the new framework may not be beneficial to families as it does away with the dependent exemption, which provides $4,050 for each qualifying dependent.

"Dependents are the major thrust," said Veliotis. "If you take away the dependent exemption for my five kids, that's $20,000, and the enhanced standard deduction won't do it for me."

Republicans have proposed to raise the child tax credit to $1,600 from $1,000. They are also calling for a new $300 credit for each parent and non-child dependent, but this tax break will expire by the end of 2022.

New income tax brackets

Losers: Households that are inadvertently bumped into a higher bracket

As part of their bill, House Republicans are cutting income tax brackets to four.

Currently, there are seven tax brackets: 10 percent, 15, percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.

Under the House bill there will be four brackets: 12 percent, 25 percent, 35 percent and 39.6 percent.

Unveiling your new brackets (single filers)

Tax Bracket
Current 2017 Rates
Proposed 2018 Rates
0% N/A Up to $12,000
10% $0 to $9,325 N/A
12% N/A $12,000 to $45,000
15% $9,325 to $37,950 N/A
25% $37,950 to $91,900 Beginning at $45,000
28% $91,900 to $191,650 N/A
33% $191,650 to $416,700 N/A
35% $416,700 to $418,400 Beginning at $200,000
39.6% $418,400 and up Beginning at $500,000
Source: Tax Cuts and Jobs Act
Unveiling your new brackets (married couples)

Tax Bracket
Current 2017 Rates
Proposed 2018 Rates
0% N/A Up to $24,000
10% $0 to $18,650 N/A
12% N/A $24,000 to $90,000
15% $18,650 to $75,900 N/A
25% $75,900 to $153,100 Beginning at $90,000
28% $153,100 to $233,350 N/A
33% $233,350 to $416,700 N/A
35% $416,700 to $470,700 Beginning at $260,000
39.6% $470,700 plus Beginning at $1,000,000
Source: Tax Cuts and Jobs Act
A group of taxpayers who are currently in the 33 percent bracket will get bumped to 35 percent under the plan. This is because the 35 percent bracket will kick in at lower dollar amounts compared to the current framework.