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One of the goals of the Tax Cuts and Jobs Act bill was to simplify taxes. In an effort to simplify taxes, the per person exemption was eliminated. This exemption previously allowed you to claim $4,050 per person in your tax household and exclude that amount from your taxable income.

For example, if your tax household was composed of five people (mom, dad, and three kids), you were able to take an exemption of $20,250, lowering your adjusted gross income accordingly. In other words, if your combined household income was $70,000, the $20,250 exemption deduction would reduce your taxable income to $49,750, not including the standard or itemized deduction. This means you would pay taxes on $49,750, not $70,000.

Do not fret though! To make up for the exemption removal, the government nearly doubled the standard deduction and increased the amounts of refundable and non-refundable child tax credits. This is how the government “simplified” taxes.

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