Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
I read about new standard tax deductions at
https://www.hrblock.com/tax-center/irs/tax-reform/new-standard-deduction-eliminated-exemptions/
Suppose I am not married. Suppose my income is 15K. Then does the new tax deduction means that I will be taxed for 15K-12K=3K?
Yes, you've got it right.
Under the old system, you had a standard deduction plus a personal exemption. The standard deduction for a single adult in 2017 was $6350, and the personal exemption was $4050 per person in your house. So if you are single with no kids and a $15k income, in 2017 your taxable income was $4600. In 2018, the standard deduction for a single went up to $12,000, but the personal exemption went away, so your taxable income in 2018 would be $3000.
In addition to the change with the deduction, the tax brackets were adjusted, meaning the tax rate paid on the taxable income is lower for most income levels. However, at the level we are talking about, the tax rate remains a flat 10% in both 2017 and 2018. As a result, in your scenario, the total tax burden would be $460 in 2017, and $300 in 2018.
Suppose my income is 15K. Then does the new tax deduction means that I will be taxed for 15K-12K=3K?
Yes.
Assuming you aren't itemizing, you take your income and subtract the standard deduction to get your actual taxable income. So for your case with no other considerations your taxable income would be $3k, this would be taxed at 10% and your total tax bill would be $300.
