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In the news lately (early 2019) are many stories of regular people complaining that they have drastically lower tax refunds than the previous year, and some even owing instead. This is in the wake of President Trump's Tax Cuts and Jobs Act, which promises in name and from its supporters to lower taxes. Among all these stories is the implication that the act has done the exact opposite. A Fox News opinion piece has taken exception to these many stories and claims that

The Tax Cuts and Jobs Act significantly cut tax rates for middle class families, 80 percent of whom had a lower tax burden in 2018 than they did before the president’s tax cuts took effect.

Is this true? How many of 2018 middle class families have a lower tax burden than they did before the act took effect?

Paul Draper
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    I've decided to tag [trump] because such tax bills are often strongly associated with the president who signed them, such that they are even called "[president's name] tax cuts". –  Feb 27 '19 at 07:35
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    End-year tax refunds are a symptom of the in-year tax system failing to collect the correct amounts and instead collecting too much. The recent reforms included eliminating many itemized deductions, so reducing the gap. This has little to do with the level of tax burden. – Henry Feb 27 '19 at 08:11
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    @Henry Indeed, and my exact complaint when first seeing these articles. But I could straight ask the question they insinuate: that taxes are actually *higher*. I had to wait for someone to make a definitive claim. –  Feb 27 '19 at 08:16
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    It's worth noting that we are currently in the middle of tax season. I.e. that most people who owe taxes (who gain by waiting as long as possible to file) haven't filed yet. If this statistic exists yet, it may be slanted. And it's possible that the statistic does not yet exist. If the first return was filed January 31st and the first refund goes out six weeks later, that would be in March. It's still February. This question may simply not be ripe yet. – Brythan Feb 27 '19 at 16:25
  • @Brythan A good point, but that hasn't stopped the media buzz... –  Feb 27 '19 at 16:34
  • This might be squeaky wheel syndrome, as people who saw even nominal decreases in their tax burden are unlikely to complain about it online, whereas people who had seen their tax burden increase (whether true or not) are much more likely to complain. But as @Henry said, the swarm of people with reduced tax returns is most likely due more with the change in withholding schedules that came from the tax plan than anything else. – DenisS Feb 27 '19 at 19:07
  • After filing this year's return (I owe), I plan to fire up 2017 tax software and make a fake return with the same inputs as this year. (My income varies somewhat.) I'd like to know if owing money this April is a result of changes in the withholding tables, or a genuine tax increase. FYI, I would have owed money in April 2017 except for Estimated Tax payments. – Andrew Lazarus Feb 28 '19 at 03:21
  • problems with the claim: the meaning of "significantly" and "middle class". – dandavis Mar 01 '19 at 22:17
  • @dandavis "Middle class" is well defined. The claim is that *"80 percent of [middle class families] had a lower tax burden in 2018 than they did before the president’s tax cuts took effect."* It's very clear. –  Mar 01 '19 at 23:04
  • CNN analysis: https://www.cnn.com/2019/04/13/politics/tax-reform-winners-and-losers/index.html Use that to make an answer if you want, I won't be able to get to it for a few more days. –  Apr 13 '19 at 16:04
  • A related source: https://www.cnbc.com/2019/04/25/the-irs-stats-are-in-heres-how-tax-refunds-look-compared-to-last-year.html –  Apr 25 '19 at 18:35

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Yes

Tax Policy Center reports across all income levels:

About 65 percent of households paid less in individual income taxes in 2018 as a result of the TCJA. About 6 percent paid more. The rest paid about the same.

Results by income level are in Table 2 of the full report:

  • Bottom quintile (< $25k): 27% reduced; 1% increased
  • Second quintile ($25-47k): 65% reduced; 6% increased
  • Third quintile ($57-78k): 82% reduced; 9% increased
  • Fourth quintile ($78-127k): 89% reduced; 10% increased
  • Top quintile (> $127k): 90% reduced; 10% increased

These figures include households with zero tax burden in both years (common in the lowest quintile), even though obviously they could not have their tax burden reduced.

"Middle class" varies in its definition, but a typical one would comprise the third and fourth quintiles, of which 86% paid less tax.

This overall result (clear majority of households paying less) is consistent with other findings. New York Times:

Other analyses reached similar conclusions. The Joint Committee on Taxation — Congress’s nonpartisan team of tax analysts — found that every income group would see a tax cut on average. So did the Institute on Taxation and Economic Policy, a left-leaning think tank that was sharply critical of the law. In fact, that group went even further: In a December 2017 analysis, it found that every income group in every state would pay less on average under the law in 2019.

So far, tax season seems to be playing out more or less as the experts predicted. H&R Block, the tax-preparation giant, said last week that two-thirds of returning customers had paid less tax this year than last (excluding people who owed no tax in either year). Taxes were down, on average, in every state.

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Paul Draper
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  • Q: _How many middle class families' tax burden was less in 2018 because of Trump's tax cuts?_ A: _True_. You might want to make your title match the question's title, or rephrase it a bit. – pipe Jan 02 '20 at 16:42
  • @pipe, I prefer to rate the accuracy of the claim, since Skeptics is intended only to verify claims, not to answer general questions. [Binary question formats](https://skeptics.meta.stackexchange.com/questions/777/untruthable-questions) are better than more open-ended ones. I will suggest an edit to the question title. – Paul Draper Jan 02 '20 at 16:47
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    Are individual income taxes synonymous with tax burden? My understanding was that the law removed some state-tax-based deductions, implying that people might end up paying more in total tax even if their federal income tax reduced. How accurate is that? – James Picone Jan 03 '20 at 02:04
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    @JamesPicone The federal government cannot change state burden, as only the states have that authority. I believe what you are referring to is that the change made it so that one can no longer deduct what they paid in state taxes from their income when paying federal tax when itemizing. Despite being calculated off of state taxes this change only affected federal taxes owed. Incidentally the result was that people in democratic states (which tend to have higher state taxes) benefited less from the change then those in republican ones, but I'm sure that was considered a feature not a bug ;) – dsollen Jan 03 '20 at 16:32
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    @JamesPicone, that's reversed: federal taxes were formerly reduced based on state/local tax burden. The TCJA removal of this deduction causes *federal tax to rise* and is fully accounted for in the statistics. – Paul Draper Jan 04 '20 at 16:36
  • @dsollen States often base their tax rules on Federal ones. While technically it's the states making the decision, federal action is the determitive factor. – Acccumulation Jan 05 '20 at 06:37
  • @Acccumulation, yes states will reuse federal tax rules, but that still wouldn't have the sort of effect than James is suggesting. In fact, it would imply that state taxes are *also* lower. – Paul Draper Jan 14 '20 at 23:50
  • @PaulDraper It could if states use federal rules for itemized deductions, but not on standard deductions. – Acccumulation Jan 15 '20 at 00:04