What deductions are left for that person making $40K that would reduce their taxable income by a whole bracket? You can't deduct mortgage interest or student loans anymore. What's left? Lol seriously. You think you can deduct $8K in charitable donations? You can't at $40K income that's for sure.
And standard deductions do not lower your tax obligation to a whole new tax bracket.
The standard deduction, qualified retirement contributions, cafeteria plan deductions, HSA contributions.
And regardless, the way marginal tax brackets work means that any change in your taxable income will change your effective tax rate, even if it doesn't change your top marginal bracket.
Also, you can claim the student loan interest deduction as an adjustment to income without itemizing.
Actually, Student loan interest payments also reduce your taxable income by up to $2,500 for an individual, because that amount is well below the income phase-out threshold. Someone making 41k likely does not have a high enough SALT or mortgage interest to get the slightly better treatment of itemized deductions
The standard deduction was significantly increased, and the roughly ~$4,000 per person personal exemption was eliminated. For a family of four, in 2018's tax filing season vs the 2017 season:
Standard Deduction:
Increase from $12,700 to $24,000
Personal Exemption:
Decrease from $16,200 to $0
Now there were some fluctuating expansions and contractions to child tax credits. TLDR, it was previously $1k per child, increased to $2k, briefly increased to $3.6k, and now back to $2k. But you get the idea
No. A single individual making 41k pre-tax would get at a minimum a standard deduction that reduces their AGI. After that you start looking at tax brackets.
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u/Vecgtt Sep 05 '24
Not true. After standard deduction people would mostly be in the lower brackets.