An Unexpected Raise!
I’ve intentionally tried to keep Retiring On My Terms a politics-free zone.
There are some political issues I care deeply about and others that matter less to my family and I.
I’ve found when discussing U.S. politics, unless you surround yourself only with people who think exactly the same way you do, roughly half of the people will agree with you, and roughly half of the people will disagree with you – and in some cases, think you are ignorant, nuts, or evil!
So I do my best to avoid going down that path at all here.
That said, what happens in Washington D.C. impacts our family on a daily basis, and recent developments have been positive for the ROMT family’s finances!
Over the past few months, I have been following the debate in Washington over tax reform.
When the tax bill was signed into law, I thought it would have a positive effect on our finances, but I really hadn’t spent any time trying to quantify the impact.
When I received my paycheck last Friday, it was larger than I expected.
Since we’re near the beginning of the year, and I knew I hadn’t received a raise from my employer, my first thought was that something had changed with one of my benefits, like health insurance, my 401(k), or one of the other paycheck deductions I have voluntarily elected.
But all of those items were exactly the same as my previous paycheck.
And then I looked at the Federal Income Tax line.
The amount withheld for federal income taxes by my employer had fallen by 18% from my last paycheck.
Resulting in a 3.8% boost to what I actually took home for the past two weeks of work!
As a general rule, I prefer to have more money to save, spend, invest, share, and donate, so I’m pleased to see the result of tax reform is more in our pockets for us to use as we see fit.
Given the complexity of the U.S. tax code, it won’t shock me if something else has also changed, and we end up having to give back a portion of our savings to the government when we file our 2018 taxes next year.
But as of this moment, it appears tax reform was a favorable development for the ROMT family, which should make our path to financial independence and early retirement just a bit easier!
How have the recent tax law changes impacted your take home pay and financial situation?