The Tax Cuts and Jobs Act, in addition to generally reducing individual tax rates, eliminates personal exemptions, increases the standard deductions and expands the child credit. For some taxpayers, a higher standard deduction may compensate for lost exemptions and even provide additional tax savings. But for those with many dependents or who itemize deductions, these changes might result in a higher tax bill, depending in part on how much they can benefit from child credit enhancements. These changes are just the tip of the iceberg.
Yes, the standard deduction has roughly doubled for all filers, but the valuable personal exemption has been eliminated. For example, a single filer would have been entitled to a $6,500 standard deduction and a $4,150 personal exemption in 2018, for a total of $10,650 in income exclusions. Under the new tax plan, they would just get a $12,000 standard deduction. Is it better? Yes. But it’s not really “doubled.”
|Tax Filing Status||Previous Standard Deduction (Set to take effect in 2018)||New Standard Deduction|
|Married Filing Jointly||$13,000||$24,000|
|Married Filing Separately||$6,500||$12,000|
|Head of Household||$9,350||$18,000|
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