Continuing my series of posts on the changes to the federal tax code under the recently passed Tax Cuts and Jobs Act, the biggest change for individual taxpayers is, in my opinion, the increase of the standard deduction from $6350 in 2017 to $12,000 in 2018 for single filers, and from $12,700 in 2017 to $24,000 in 2018 for married filing jointly. The effect of that increase will be to reduce the tax liability of taxpayers who use the standard deduction instead of itemizing deductions, which is a large percentage of all taxpayers.
The large increase in the standard deduction will also have the effect of reducing, perhaps dramatically, the number of taxpayers who itemize their deductions. If your itemized deductions were more than the old standard deduction, but are now going to be less than the new standard deduction, you won’t have to itemize anymore. That’s going to not only reduce your tax liability, it’s also going to simplify the preparation of your return.
I have seen some commentaries suggesting that the new legislation doesn’t benefit lower-income taxpayers. I just don’t see how that can be so. Most lower income taxpayers (probably the vast majority) take the standard deduction. With the standard deduction nearly doubling for both single taxpayers and married taxpayers filing jointly, the result would have to be a reduction in tax in almost every case. Am I missing something?
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