With passage of tax reform that will reduce the taxes of virtually all Maine families, we wanted to send you a pretty simple explainer that shows just how the actual tax rates and tax brackets change to help Maine people.
Far too many media sources and liberals have worked to confuse people instead of simplifying this discussion.
First of all, the standard deduction doubles. This means that the first $24,000 of income a family earns is not taxed.
The second big change is that the tax rates are cut and tax brackets are changed to help people earn more at lower tax rates.
Below are two points on the new tax brackets for married couples filing jointly. This reform also affects small businesses whose owners file the income on their individual taxes.
TAX CUTS AND MORE FAVORABLE TAX BRACKETS FOR EVERYONE
Tax Bracket #1:
Old Rate: 12% up to $18,650
New Rate: 10% up to $19,050
Tax Bracket #2:
Old Rate: 15% from $18,651 up to $75,900
New Rate: 12% from $19,051 up to $77,400
Tax Bracket #3:
Old Rate: 25% from $75,901 up to $153,100
New Rate: 22% from $77,401 up to $165,000
Tax Bracket #4:
Old Rate: 28% from $153,101 up to $233,350
New Rate: 24% from $165,001 up to $315,000
Tax Bracket #5:
Old Rate: 33% from $233,351 up to $416,700
New Rate: 32% from $315,001 up to $400,000
Tax Bracket #6:
Old Rate: 35% from $416,701 up to $470,700
New Rate: 35% from $400,001 up to $600,000
Tax Bracket #7:
Old Rate: 39.6% on income $470,701 and up
New Rate: 37% on income $600,001 and up
As you can see, the brackets set a lower tax rate for higher amounts of income, reducing taxes on everyone. Those with lower incomes are completely removed from any federal income tax responsibility, and those up through each income level see savings.
Perhaps this simple rough example shows it best:
A married couple with $77,400 per year in taxable income, not counting savings from increased deductions and additional savings, will pay $2,131 LESS in federal income taxes based on these new rates and brackets.
We plan to send out more information in coming days to explain this very complex issue.
The reality is, the code was such a complicated mess, anyone trying to explain it can easily make it confusing.
The simple thing to remember here is: tax rates drop and brackets slide higher to allow people to earn more money at lower tax rates. Virtually everyone gets a tax break.
And key deductions such as medical expenses, charitable giving, mortgage interest and student deductions are maintained or improved.
State & local tax deduction is also saved for everyone except the very wealthy.
We hope you will share these facts in the days ahead, and we remain grateful for your continued support.