2) A
standard deduction of Rs 40,000 has been proposed to be introduced for salaried individuals in Budget 2018.
In this case, we look to two competing elements:
standard deduction and itemized deduction.
This bill keeps more of taxpayers hard-earned money in their pockets by doubling the
standard deduction and reducing income tax rates.
40,000 worth increase in the Union Budget 2018-19, along with a
standard deduction of Rs.
Since taxpayers will use the greater of their
standard deduction or their itemized deductions, fewer taxpayers will itemize.
Keith Walker, assistant professor in the School of Accountancy at Southern Illinois University-Carbondale, said the
standard deduction is more or less a tipping point which may entice people to give more to charities in order take advantage of itemizing deductions.
Benzarti estimates the perceived compliance costs to tax filers by computing whether there were "too few" taxpayers with itemized deductions slightly greater than the
standard deduction threshold.
Dan Coates of Indiana, now Trump's director of national intelligence, also includes a big increase in the
standard deduction, leading some Republicans to say "We're doing Ron Wyden's bill," the senator said.
That
standard deduction is now $6,350 for single taxpayers, $9,350 for heads of households, and $12,700 for couples filing joint returns.
The potential elimination of the Affordable Care Act investment tax provision creates an incentive for high-income taxpayers to push capital gains out of 2016 into 2017, when the provision would not be in effect, and the increase in the
standard deduction creates a modest incentive for middle-income taxpayers to accelerate itemized deductions into 2016, when these deductions will be most useful.
Tax filing requirement thresholds, the
standard deduction and certain credits were adjusted along with income tax brackets based on the inflation rate of 2.
For 2015, net unearned income is total unearned income less $1,050 (the minimum
standard deduction for a dependent), less another $1,050 or allowable itemized deductions directly connected with the production of the unearned income, whichever is greater (Revenue Procedure 2014-61).
