Americans’ monthly paychecks increased by an average of $130.76 in February thanks to the new 2018 tax plan changes, according to a new LendEDU survey, with a majority of respondents saying they will use the extra income to pay down credit card debt.
As a result of the Tax Cuts and Jobs Act of 2017, the federal tax withholding tables changed on Jan. 11, 2018. The Treasury estimated that 90% of Americans who get a paycheck are likely to see more in take-home pay as a result. Sure enough, most Americans started to see the impact of the new tax plan in their paychecks starting on Feb. 1.
To quantify the financial impact of these changes, LendEdu conducted an 11-question survey of 1,000 Americans who reported that their take-home paychecks have increased as a result of the tax plan changes.
Here are the survey highlights:
- Respondent reported a $130.76 increase in their average monthly paycheck after tax cuts
- Take-home pay after taxes increased by 3.5% on average
- 35.7% of respondents are using the tax savings to pay down debt, 9.9% of respondents are increasing luxury spending
- 62% of respondents will pay down credit card debt
- 12.8% of respondents are increasing retirement savings, of those 47.66% believe that they will be able to retire sooner.
- 55.3% of respondents are more confident in their financial futures as a result of the tax plan changes
- 60.7% of respondents believe that the 2018 tax plan will strengthen economy
- 50.3% of respondents reported a more positive sentiment towards President Trump
The most interesting finding in the survey is “How Are Americans Using Tax Savings.”
LendEdu asked respondents to best describe how they are going to spend their additional take-home pay. As the most common answer, 35.7% of respondents said they are going to use their extra take-home to pay down debt faster. 19% of respondents are going to be spending as usual and will be letting the additional money collect in their bank accounts. Additionally, 12.8% of respondents are going to use the additional money to save more for retirement while 9.9% of respondents are going to use the additional money on life’s day-to-day luxuries.
As a follow up, LendEdu wanted to find out what types of debt Americans will be paying down. Respondents were asked to select all that apply. The survey found that 62.18% of respondents will be paying down credit card debt. Another priority for 28.57% of respondents will be paying down auto loan debt. With the additional take-home pay, 25.77% of respondents will be paying down student loan debt. And 21.57% of respondents will be paying down personal loans with the additional money.
In light of the deplorable public pension picture, it was good to learn that saving for retirement is on the minds of many Americans. Many of the Americans surveyed will be using the tax savings to save more for retirement. According to one survey question, 47.66% of those respondents believe that they will be able to retire sooner as a result of the additional take-home pay, and 13.28 percent of those respondents are unsure. Good luck with that.
Another question asked respondents to best describe their financial confidence as a result of the 2018 tax plan changes. 55.3% said they are more confident in their financial futures as a result of the 2018 tax plan changes. Meanwhile, 60.7% said that they believe the 2018 tax plan changes will strengthen the economy.
It is also worth noting that the fastest way to shape America’s ideological beliefs is through their wallets: the survey found that the slight majority (50.3 percent) of respondents view President Trump in a more positive light as a result of the tax plan changes. Meanwhile, 43.4% of our respondents reported that their sentiment has not changed and 6.3 percent of respondents reported that their sentiment has become more negative as a result of the tax plan changes.
Lastly, in Question 11, respondents were asked to best describe their feelings about the 2018 tax plan changes. Here, 70% of the respondents described their feeling as happy, reporting either “very happy” or “somewhat happy” about the changes. Meanwhile, 23.5% of the respondents – whether their income had gone up or not – said they are indifferent and 6.5% could be categorized as unhappy about the tax plan changes despite additional take-home pay in their paychecks.
via Zero Hedge http://ift.tt/2o8Ik7z Tyler Durden