Increased Standard Deduction Example 1

Increased Standard Deduction Example 1

FACTS: Brad and Susan are married with three dependent children. Brad earns a salary of $310,000, and Susan stays home with their children. Brad and Susan’s itemized deductions typically include $12,000 of mortgage interest, $15,750 of state and local income taxes, and $8,000 of real estate taxes.

Old Law

  • Salaries & Wages
  • 310,000
  • Personal Exemption
  • (20,750)
  • Itemized Deductions
  • (35,750)
  • Taxable Income
  • 253,500
  • x Marginal Rate
  • 33%
  • Tax Liability
  • 58,381
  • Child Tax Credit
  • Net Tax Liability
  • 58,381

New Law

  • Salaries & Wages
  • 310,000
  • Personal Exemption
  • Standard Deduction
  • (24,000)
  • Taxable Income
  • 286,000
  • x Marginal Rate
  • 24%
  • Tax Liability
  • 57,219
  • Child Tax Credit
  • (6,000)
  • Net Tax Liability
  • 51,219

***Disclaimer: I am a tax accountant and a CPA licensed in Massachusetts , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**

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