By Maggie Scruggs
President Donald Trump rolled out a new tax plan early this year making cuts for corporations and some adjustments for individuals.
Changes in tax laws can translate into gains or losses due to one’s circumstances, but for students not a lot changed, according to Lance Palmer, professor of financial planning and housing and consumer science at the University of Georgia.
When the government has wanted to stimulate the economy historically, individual taxes were cut more than business taxes. This new tax law is unique because the changes are mostly on the corporate side, which is leading companies to give their workers raises, pay bonuses and reinvest in their businesses, Palmer said.
Although no major changes to the tax laws will affect students, Palmer said some students may find a few benefits in some nuanced cases.
Most students will not see a shift in their tax brackets. Students generally fall into the lowest bracket, making less than $10,000, said Palmer. For those students making more than that but less than $38,000, they will find a 3 percent decrease in taxes from 2017 to 2018.
For every tax filing type, the standard deductions were raised. A standard deduction is “the amount that you can deduct from your income before calculating your tax liability if you do not itemize your deductions,” according to factcheck.org. If students are filing as single payers, their standard deduction was doubled with the new reform.
Sarah Feyerick, a senior at UGA majoring in engineering and a DPR construction worker, said she benefited from the deduction increase and the bracket changes. However, Palmer said students such as Feyerick could be impacted by other changes.
Palmer warned that grads entering the workforce should be aware of a class of deductions called unreimbursed employee expenses that will be eliminated. This means employees who are not directly reimbursed for travel, gas, moving expenses and other work related expenses cannot claim them on the return.
“It really pays for employees to ask ‘do I need to use my own vehicle or will I have to pay out of pocket certain things?’ It makes it more important than ever that your employer is going to reimburse your expenses,” said Palmer.
As Feyerick prepares to move across the country to San Diego, the tax implications are something she is considering, especially if the moving budget doesn’t completely cover all of her expenses.
Trump’s tax cuts focused more on the corporate side rather than the individual side historically used to stimulate the economy. The idea is that the money a company saved on its taxes would be used to reinvest in the business or pay workers more through raises or bonuses, thus trickling down to ultimately benefitting the economy, according to Palmer.
In some cases, businesses have used their tax savings to give out bonuses, such as Apple, or as contributions to retirement savings, such as Aflac.
In Feyerick’s case, she received a bonus, but would have preferred a raise.
“If anything, I’d rather that money go towards raises because that’s the money I budget for and it gets taxed less,” she said.
Maggie Scruggs is a student at the University of Georgia.