Craig Wear, CFP® explains how the 2017 Tax Cuts and Jobs Act (TCJA) lowered individual federal income tax brackets (for example, 25%→22%, 15%→12%, 28%→24%) and discusses why that reduction lowers the cost of converting tax-deferred IRA balances — a point especially relevant to high-net-worth ("IRA millionaire") individuals considering Roth conversions.
So the cost of converting over time just went down for everybody, but especially for you if you're that IRA millionaire. And I'm going to try to demonstrate some of these things to you guys. So in 2017 and during Trump's first administration, he enacted with Congress the Tax Cut Job Act. And what that did is it took tax rates. You can see here my pointer from your income. If you're in the 25% tax bracket, it took you down to the 22% bracket. If you're in the 15, it took you down to 12. If you're in the 28% bracket, it took you down to 24. And you can read the rest of the way. You'll notice that for higher incomes, the tax rates changed less.
