If you haven’t noticed extra money in your paycheck, you should soon.
Employers have until Thursday to roll out new withholding guidelines from the IRS, with an estimated 90 percent of Americans expected to see fatter paychecks.
It’s a key result of the contentious tax overhaul by Congress, and it isn’t just individuals seeing the windfall.
The tax rate for businesses was dropped to 21 percent from 35, prompting at least one Hall County company, Mincey Marble, to share the savings with employees through bonuses.
“I wanted to share this benefit ... in addition to investing back into our company,” Mincey President and CEO Donna Mincey said.
While the first reaction might be to spend the extra cash on something you want rather than need, others offer or are taking a more cautious approach.
“For a business or an individual, the first thing to do is look at (whether) there is any high-interest debt (to consider),” said Perry Barnett, a certified public accountant whose Gainesville firm, Rushton, advises businesses on a number of issues, including planning, accounting and payroll services.
From there, businesses could look at other needs.
“Businesses have had some pent-up demand for capital infrastructure, hiring and expansion, things like that,” Barnett said.
Chris Kinsey, office manager at Millie’s Drapery and Decorating in Gainesville, said his business is in a “wait-and-see” mode concerning tax breaks.
“It seems like it’s going to help us a lot, but we’ve got to sit down with our accountant,” he said. “We’re hopeful there’ll be some savings. ... We had a really good year last year, and we’ve tried to share some of that with our employees. And we’d like to be able to continue to do that.”
As for regular taxpayers, they may not fully know their tax savings until they file their income tax return next year, Barnett said.
“There are a lot of little things that changes have been made to,” he said.
For one thing, the standard deduction is increasing to such an amount that it might convince taxpayers to stop itemizing deductions on their federal returns.
And because of that change, taxes get trickier for Georgians — and other Americans in states that tax income states.
The concern is residents who have used federal itemized deductions to reduce their state tax liability now would pay more state taxes.
Last week, Gov. Nathan Deal said in a statement that he has asked the state’s Office of Planning and Budget to work with the Fiscal Research Center “to assess different components of the federal tax bill and their potential impacts if applied at the state level.”
“Once that analysis is available,” Deal said, “I’ll provide further information and parameters to
House and Senate leadership for their consideration.”
“The bottom line is this: The Georgia internal revenue code bill will be written so that the citizens of Georgia realize the full benefit of the (federal tax code) rewrite,” said state Sen. Butch Miller, R-Gainesville.
He added that he believes “there will be legislation introduced during this session and passed during the session and signed by the governor (to address the matter).”
In the meantime, the new money is a blessing — from bonuses or paychecks — for local residents.
“I’m saving for my daughter’s schooling and all that,” said Juan Contreras, a production supervisor at Mincey, adding that his daughter is a high school junior. “That (extra money) is a big help.”
Pedro Quintanilla Jr., who works in Mincey’s production finishing department, is looking to put the extra money into savings.
“I’m real big into putting away as much as I can for any future investments I choose to pursue,” he said.
Kinsey said he’s noticed employees are getting $20-$30 extra in their weekly paychecks.
“That can add up,” he said.
“$100 or $200 more a month in your paycheck — that’s not crumbs,” said U.S. Rep. Doug Collins, R-Gainesville.
President Donald Trump and Republicans have criticized House Democratic leader Nancy Pelosi for describing as “crumbs” the bonuses of $1,000 or more that some companies are giving their workers as a result of the tax cuts.
“That’s how you buy your kids new sneakers. That’s how you pay for piano lessons,” Collins said. “That’s the kind of stuff the individual rates are doing, and it encourages the economy.”
Also, businesses have responded positively to the new tax law, Collins said.
“They have used (windfalls) for bonuses or they’ve been able to hire more people,” he said.
Collins expects the tax benefits to snowball as businesses “start taking advantage of buying capital expenditures and capital projects so they can expand. ... It’s an exciting process right now.”
The new tax has drawn comparisons to supply-side, or “trickle-down,” economics of President Ronald Reagan in the 1980s. It’s a theory that says economic benefits for the wealthy will reach everyone else, and it’s drawn a lot of criticism over the years.
One concern is that in a healthy economy — the country is in the third-longest economic expansion on record — sharp tax cuts can also raise the risk of high inflation.
“If we want to see trickle-down economics work, people have to take those bonuses and tax cuts and put them into use,” said Mike Ryan, an economics professor at the University of North Georgia. “Paying down credit card balances doesn’t stimulate the economy.”
The Associated Press contributed to this report.