Hi everyone and welcome to another Wealthy and Wise Wednesday. We’re pushing right up to Christmas. It’s getting kind of exciting, seems like every time I go out on the streets, it gets more and more and more crowded. How is it in your part of the country?
So you could get really frustrated with trafficking. I grew up outside of the bay area in California and before my wife and I moved out to California, we lived in the East Bay of San Francisco area and man, it was traffic and nightmare. This has been quite a while. I can only imagine how much worse it is now. But I used to get so frustrated.
But come Christmas time, we’re all supposed to be happy and joyous and forgiving. So hopefully when you’re out there you’re not seeing too much road rage and certainly, hopefully, you’re not the one with the road rage. So if you’re listening to this podcast while you’re driving, I can calm you down, a little bit of hum…..and relax. The Christmas Holiday season will be over before you know it. So enjoy it. Hope again you have a lot of family time and can really spend some time helping others that may not be so fortunate as you.
Okay. So we’ve had some really interesting things happening these past few weeks. I don’t necessarily want to talk too much about politics and all that good stuff but there are some things that are potentially coming down that pipe that’s going to either help or hurt you come 2018. And one of them is the tax plan that’s been at least halfway through the whole process to this point.
And I happen to pick up, sorry, if I look at the computer a little too much today but I happened to pick up a calculator that was put out by one of the congressmen to just kind of, it’s nothing scientific to the tee but it does give us some indication of what this tax plan might mean to you. So I thought it would be kind of fun just to put in a few different scenarios and see how that might look in your situation.
So the first one I’m going to put in is a couple and I just picked this state because it was about mid-country. I picked Illinois. For the next one, we’ll pick another state. But here we got a couple in Illinois, married filing jointly making $50,000 a year and they’ve got three kids. Statistically, we have 2.3 kids in the United States per couple. It was hard to put in that point three so we’ll see what the difference is between two and three kids.
So what would happen if the plan passed in one of two ways? So you’ve got the House Plan and we’ve got the Senate Plan. And each of them has a little bit different nuances and we’ll see what they do. So the results are these. In the current House Plan, this couple would save $953 a year and in the Senate Plan, they would save $1,886, almost twice as much money as the House Plan. So if you’re married filing jointly living in Illinois and have $50,000 a year income, you might just be voting for the Senate Plan and put a few more bucks in your pocket.
Okay. So let’s double this income. Let’s look for somebody making $100,000 a year. And this time instead of Illinois let’s choose, how about we choose Mississippi. Okay little southern state in there, still the 2.3 kids and let’s see what happens with them. Well, in the current House Plan, they would save $2,313 in the 2018 tax bill, and in the Senate Plan, they would save $3,246. So are you getting a little theme here? The Senate Plan seems to be much more aggressive for tax breaks at least up to the hundred thousand dollar mark.
What we want to do is see where this doesn’t really help or affect anybody. So let’s bump that up to $150,000 and now we’ve got, now they’re getting a little bit closer in parity. So the House Plan you’d save $5,070 and in the Senate Plan, you’d save $5,771. So about $700 more in the Senate Plan over the House Plan.
Alright. So now let’s bump this up to 200,000. See what happens. And wow still saving some money. So in the House Plan, you save $6,373 and in the Senate Plan, wow, you start to save even more, $7,854. So it seems right there that $150,000 mark, they were really close but then the Senate Plan starts to get a little better as you creep up that wage or that earning a wage.
At $250,000, voila! House Plan you’re saving $6800. Senate Plan now you’re saving $9800. That’s pushing ten thousand bucks. There’s a lot you can do in this world with $10,000 at least, at the very least that you might get this amazing vacation, right?
So let’s see at $300,000 in income, married filing jointly. Still saving money. House Plan $5700. Senate Plan over $13,000. So far, if you’re all for tax breaks and saving a little bit more in taxes, the Senate Plan seems to be having the advantage.
Let’s jump all the way up to a half million dollars a year because I’m really curious to see where we don’t save any money. And we’re still saving money even at a half million a year. The House Plan saves you $8200 a year. But get this, that’s backward. So the House Plan is kind of going backward at this but the Senate Plan now you’re saving $25,000, $24,917 to be exact on a half million dollar income.
Well, we talk about the one percent. I shouldn’t say we as a podcast as a company does. But the country talks about the one percent and how they are getting all the tax breaks and so on and so forth. Let’s just see. Definitely, at half million dollars, you’re in the 1% tax bracket. But you’re still paying, what do we get here, you’re still, oh it’s all broken down into three different…four, so 20, 40, 60, they’re still paying over a hundred and some odd thousand. Oh total federal tax bill, there it is, $112,000 in taxes. So that’s a pretty good amount of money.
Interestingly enough in the House Plan, you’d pay $128,000 in taxes. Right now, you’re paying $136,000 in taxes if you’re making a half million dollars a year. So let’s bump this up again to $750,000 in income. And everybody still making money, right now, or saving money I should say, not making money when. Give when you pay. When you lose money when it goes out of your pocket you not making money. When you give, when you pay, when you lose money, when it goes out of your pocket, you’re not making money. You’re just paying less.
So right now, you’re paying 235,000 in taxes. In the House Bill, you’d pay 216,00 and in the Senate Bill, you’d be paying 205,000, which means you would save in the Senate Plan 30,000 and in the House Plan you save 19,000.
Alright, how about those evil millionaires who make way too much money, right? Let’s see what happens to them. Well, they get to save a little bit still. So right now, they’d pay 335,000 in taxes. But they’re going to save 31,000 in the House Plan. They’re going to save 41,000 in the Senate Plan.
So sorry for going, to tell all those. If I bring that back down to what I see a lot, it’s about $150,000, husband and wife both working filing jointly, couple kids, 2 or 3 kids, living in just about every state across the country. Well, let’s see what happens if they happen to be living in North Carolina at the time. This could be significant to a lot of people because, in the House Plan, you save $5,000 and in the Senate Plan you save $5,700.
So that’s probably where the two plans have the most parity in getting really close to each other, about what middle to upper America is earning out there. So anyway that’s the new tax plan coming along. I don’t know if it’s going to be in place and ready to go. A lot of times when plans are enacted in a given year say in 2018, they’ll at least go retroactive for that year. So with any kind of luck, depending on how you’re looking at this. We may see some tax savings next year for our 2018 taxes. And hopefully, if you’re wise what will you do with that savings?
Test, test, test. Yes, hopefully, you’re going to save it, invest it and make it become a whole lot more than it is today. And so yeah, that’s it. So any questions that you have? I’m not an expert on this tax plan. It’s certainly on what to do with tax savings.
Send those questions to firstname.lastname@example.org. Try to answer them just as fast as I can. And also if you’d like to have a strategy session, talk about some of the ideas and things that we’re doing, really helping people across the country. If you want a copy of my book and how we use tax advantage investments to help you accumulate wealth even faster, feel free to reach out.
And in the meantime, just to have a great holiday. Enjoy it. Have fun. Eat a lot. Hope you get everything that you’re asking to Santa Claus or that you’re a really good Santa Claus to others. Well, that’s it for today. For another Wealthy and Wise Wednesday, we hope you have a great one. Talk to you next week. Until then, take care.