The Tax Cuts and Jobs Act of 2017 have been touted as one of the most impactful tax cuts in history. But the impact it will have will not be fully felt until taxpayers go to file their 2018 income tax returns in April 2019. But still, this GOP tax cut is widely believed to benefit top earners more than lower-wage employees. Here’s how much the top earners will save with the new tax law, compared with how much the average worker will save, at some of the biggest companies in the country.
Elon Musk and Tesla Employees
Elon Musk paid at least $593 million in income taxes in 2016, primarily because he exercised stock options that would have otherwise expired at the end of 2016. In 2016, the highest U.S. tax bracket was 39.5 percent, so if that was his effective rate, he would have had an income of $1,501,265,822, assuming he took the standard deduction. The highest personal tax bracket for 2018 is 37 percent, so if he has the same $1.5 billion in income in 2018, his tax bill will be $555,468,354, saving him $37,531,645.
On the flipside, a forklift operator at Tesla makes an average of $35,359. In 2017, a single person making that amount would have paid $3,885.10 in taxes by taking the standard deduction. In 2018, their tax bill for the same salary will be $3,755.58. They will save $129.52 with the new tax cut.
An engineering manager at Tesla makes an average of $150,799. In 2017, the taxes on that income for a single person who did not itemize deductions would have been $33,427. In 2018, that same taxpayer will pay $27,601.26, a difference of $5,826.21.
Douglas McMillon and Walmart Employees
In 2018, Walmart CEO Douglas McMillon received total compensation of $22.8 million. The 2.5 percent reduction in personal income tax for his bracket means he will pay $570,000 less in income taxes than he would have paid in 2017 if he had earned the same amount of compensation and took the standard deduction.
The typical Walmart worker earns $19,177 per year. In 2017, they would have paid $1,457.80 in taxes on that amount. In 2018, their tax burden will be $717.70, a difference of $740.10, or less than half the tax due the previous year.
Mary Barra and General Motors Employees
Mary Barra, CEO of General Motors, earned $2.1 million in salary and $21.96 million in total compensation in 2017. The tax on her total compensation at 2017 rates would have been $8,636,361 if she filed jointly and took the standard deduction. In 2018, her tax burden for that same income would be $8,055,699, or $580,662 less if she filed the same way.
An assembly line worker at General Motors earns an average of $41,365. The 2017 tax on that amount, for a single person who takes the standard deduction, was $4,786. For 2018 taxes, that same taxpayer will pay $3,333, or $1,452 less.
Keep reading to find out more about tax shelters, tax breaks and other tax tips you should take from the rich.
Mark Zuckerberg and Facebook Employees
Some CEOs take smaller salaries and are compensated in other ways, such as with stock options. Mark Zuckerberg, CEO of Facebook, takes an annual salary of $1. His other compensation in 2017 totaled $8,852,366. If this compensation was taxed at the same rate as regular income, his tax bill would have been $3,445,738, assuming he and his wife filed jointly and took the standard deduction. In 2018, the tax bill for the same income will be $3,205,874. He would save $239,864.
A software engineer at Facebook makes about $160,000 a year. If that engineer is married filing jointly and takes the standard deduction, they would have paid $28,302 in income tax in 2017. In 2018, they will pay $21,799, or $6,305 less.
Jeff Bezos and Amazon Employees
Jeff Bezos made $1.6 million in compensation from Amazon in 2017, although his net worth grew by considerably more — as much as $40 billion more due to the increase in the stock price. The 2017 tax burden on that salary for a married taxpayer filing jointly who takes the standard deduction was $573,801. For his 2018 taxes, the same scenario will result in a tax bill of $522,499, or $51,302 less.
The median worker salary at Amazon is $28,446. A married taxpayer filing jointly who takes the standard deduction would have paid $1,574 in taxes in 2017. In 2018, the same taxpayer will pay $444, a savings of $1,130.
The Standard Deduction Is a Big Part of Savings
The 2017 Tax Cuts and Jobs Act made two big changes to the tax code that affect everyone. The tax brackets were changed so that most people pay a smaller percentage in taxes. But a big factor in the change in your tax bill, and one that’s often overlooked is the effect of the standard deduction. For 2018, the standard deduction for single filers was increased from $6,350 to $12,000. For a married couple filing jointly, the standard deduction went from $12,700 to $24,000.
The standard deduction is the amount you can subtract from the income you make before you figure out how much tax you owe. So, in 2018, you don’t pay taxes on the first $12,000 you earn if you’re single, or the first $24,000 you and your spouse earn if you are married. For low-income earners, this can make a significant difference in the amount of tax you will pay in 2018 compared to 2017.
Click through to read more about crazy tax breaks you’ve never heard about.
More on Taxes
- These Are the Receipts to Keep for Doing Your Taxes
- The 4 Craziest Ways People Have Legally Avoided Paying Taxes
- What to Do If You Lost Your W-2
- Watch: Why You Shouldn’t Assume You’re Getting a Tax Refund