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Letter: The tax cut math – sometimes it’s not a cut at all


Thursday, December 28, 2017

The Tax Cuts and Jobs Act 2017 will only benefit low and middle-class taxpayers who do not have dependents nor itemize their deductions. Even though this law increased the standard deduction, it eliminates the exemptions ($4,050 per exemption for 2017).

A single taxpayer with no dependents in 2017 has $10,400 ($6,350 standard deduction and $4,050 for one exemption) With the new law this taxpayer’s standard deduction will be $12,000. This is a decrease is taxable income of 1,600.

A single taxpayer with one dependent in 2017 has a $14,450 deduction from AGI. Under the new law this taxpayer’s standard deduction is $12,000. This is an increase in taxable income $2,450.

Married-Filing-Jointly taxpayers with no dependents in 2017 have a $20,800 ($12,700 standard deduction and $8,100 for two personal) deduction from AGI. With the new law these taxpayers’ standard deduction will be $24,000. This is a decrease is taxable income of 3,200.

Give the MFJ taxpayer just one dependent and things again are different. For 2017 these taxpayers have a $24,850 deduction for AGI ($12,700 standard deduction and $12,150 for 3 exemptions). Under the new law these taxpayers’ standard deduction is $24,000. This is an increase in taxable income $850.

For each additional dependent the taxable income goes up $4,050.

For taxpayers who itemize their deductions the increase in taxable income can be much larger. Using the MFJ taxpayer with one dependent and $15,000 itemized deduction, the increase in taxable income is $3,150.

John Jauhola-Straight

Concord