Categories: Life

26 WAYS THE GOP’S TAX REFORM WILL AFFECT YOUR WALLET

1. Bigger Standard Deduction, Goodbye Exemptions

A hallmark of the new law is the near doubling of the standard deduction to $12,000 on single returns, $18,000 for head-of-household filers and $24,000 on joint returns … up from $6,350, $9,350 and $12,700 in 2017. Congressional analysts say bulking up the standard deduction will let more than 30 million taxpayers avoid the hassle of itemizing write-offs on their tax return because the bigger standard deduction would exceed their qualifying expenses.

As under present law, individuals age 65 or older and blind people get even higher standard deductions. Two 65-year-olds filing a joint return, for example, would add $2,500 to the $24,000 standard deduction. An individual taxpayer age 65 or older would add $1,550, bringing the standard deduction to $13,550. In exchange for the bigger standard deductions, personal exemptions (the $4,050 deduction for each exemption claimed on the return) are eliminated. So a married couple with four kids would lose $24,300 in exemptions in exchange for the $11,300 boost in their standard deduction. (Part of this would be made up via larger child credits and a new family credit as discussed on the next slide).

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