Some filers get a reduction under the recent tax cut, but for the “typical family of four,” the majority will see an increase. You can easily check this when filing your 2017 taxes.
On the 2017 return, for a family of four using the standard deduction, adjusted gross income is reduced by a standard deduction of $12,700 and personal exemptions of $16,200, totaling $28,900.
Under the 2018 rules, the standard deduction goes to $24,000, but the personal exemptions are eliminated yielding $4,900 more taxable income. In the 10 percent bracket, that’s a tax increase of $490.
For a family of four itemizing deductions of $24,000 or more, the taxable income increases by $16,200. Families with itemized deductions below $24,000 will owe between $490 and $1,620 more, before counting the cap on deductions for state and local taxes.
Digital Access For Only $0.99
For the most comprehensive local coverage, subscribe today.
While there are winners under this tax plan, middle-class families are not among them. As you prepare your 2017 return, calculate what you will owe on your 2018 return. If your reduced withholdings won’t be enough to cover your 2018 tax year obligation, you might want to consider filing a new W-4. You also might want to consider who you want representing you in Washington.