Report: 64% of R.I.ers getting tax cut, 7% tax increase in 2018

THE 2017 FEDERAL TAX OVERHAUL will give 64.2 percent of Rhode Island taxpayers a cut in their federal taxes, while 7 percent will see an increase in the 2018 tax year.
THE 2017 FEDERAL TAX OVERHAUL will give 64.2 percent of Rhode Island taxpayers a cut in their federal taxes, while 7 percent will see an increase in the 2018 tax year.

PROVIDENCE – Fewer then two-thirds of Rhode Islanders will see a tax cut on their 2018 federal tax bill, according to calculations done by the Tax Policy Center at the Urban Institute and Brookings Institution.

Based on the 2017 Tax Cuts and Jobs Act, the report by the Urban Institute and Brookings released Wednesday shows that 64.2 percent of Rhode Island tax filers will see a decrease in their federal taxes of an average of $2,000. At the same time 7 percent of Rhode Islanders will see an average tax increase of $1,400. The rest of the state’s taxpayers will see no change in their federal tax bill.

Looked at as a whole, on average Rhode Islanders will see a federal tax reduction of $1,200 in 2018, or a 1.6 percent increase in their after-tax income.

Across the United States, 64.8 percent of taxpayers will see a tax reduction of an average of $2,180 this year, while 6.3 percent will see a tax increase that averages $1,630. Overall, U.S. taxpayers are expected to see an average reduction in taxes of $1,330 in 2018.

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The report said that how someone is specifically affected by income sources, martial status and family composition among other aspects that dictate tax provision eligibility.

The report also explored the effects of the tax rate changes in the hypothetical dissolution of the state and local tax deduction cap of $10,000, which was a part of the tax overhaul as passed. In that scenario, Rhode Island’s average tax cut would rise from $1,200 to $1,530.

The elimination of the SALT cap would also increase the amount of Rhode Islanders that would receive a tax reduction by 1 percentage point, while those receiving a cut would receive an average of $2,390. The amount of Rhode islanders that would experience a tax increase would decline from 7 percent to 5.4 percent and the average increase would be $960.

The SALT deduction is seen by some as disproportionately benefiting less fiscally sound states while others see the reduction as spurring progressive use of state money. The SALT limit is also seen to raise federal taxes for higher income brackets more than lower income brackets, according to the report.

The different effect of the SALT cap is seen in the statistics for New England states, with the higher-tax states, Connecticut and Massachusetts, seeing more taxpayers experiencing larger tax increases than those is the lower-tax states, Maine, New Hampshire and Vermont.

  • Connecticut: 65.1 percent with average tax cut of $3,130, 8.4 percent average tax increase of $2,420
  • Maine: 69.5 percent tax cut of $1,770, 5.4 percent tax increase of $1,280
  • Massachusetts: 67.4 percent tax cut of $2,800, 7.3 percent tax increase of $1,740
  • New Hampshire: 71 percent tax cut of $2,500, 5.8 percent tax increase of $1,170
  • Vermont: 67 percent tax cut of $1,860, 5.3 percent tax increase of $1,360

Chris Bergenheim is the PBN web editor.

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