Increased Standard Deduction Example 2

Increased Standard Deduction Example 2

FACTS: Chris and Rachel are married with no children. Chris earns a salary of $200,000, and Rachel earns a salary of $110,000. Chris and Rachel’s itemized deductions typically include $6,000 of mortgage interest, $15,500 of state and local income taxes, and $4,000 of real estate taxes.

Old Law

  • Salaries & Wages
  • 310,000
  • Personal Exemption
  • (8,300)
  • Itemized Deductions
  • (25,500)
  • Taxable Income
  • 276,200
  • x Marginal Rate
  • 33%
  • Tax Liability
  • 65,872
  • Child Tax Credit
  • Net Tax Liability
  • 65,872

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
  • 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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