Now that it’s official that Donald Trump is our next president (whether you like it or not), money on been on the brain for many, especially when it comes to his new tax plan. According to Fortune, Tax Policy Center’s analysis of his tax plan found some interesting discoveries.
For instance, households throughout the income distribution would see their tax bills decrease. However, some taxpayers, especially single people and parents, would pay more in taxes than they currently do today or under Hillary Clinton’s proposed tax plan.
Three major changes make Trump’s plan especially tough on single parents. Here’s the breakdown:
1. He would eliminate the head-of-household filing status, thus requiring single parents to file as individuals. This boosts tax rates for single parents at most income ranges. Sighs.
2. Second, Trump would eliminate personal and dependent exemptions, which raises taxable income for all single parents who do not itemize. Fortune broke it down:
“Under current law in 2017, a single parent with one child can take a $9,400 standard deduction and two $4,100 exemptions, thus reducing her taxable income by $17,600. Trump would replace that combination with a $15,150 standard deduction, making $2,450 more income subject to tax. And bigger families would get hit even harder—their taxable income under Trump’s plan would go up by $4,100 for each additional child, relative to current law.”
3. Trump plans to decrease the current tax schedule from seven rates to three. This essentially means that heads of households would likely have higher taxes. For a single parent with one child who claims the standard deduction, they would face a 25 percent tax rate on adjusted gross income (AGI) between $53,050 and $68,550. As of now, there is just a 15 percent rate under current law.
See Fortune’s chart below:
It’s not targeted for any particular wage, from AGI levels between $15,150 and about $560,000. In a single parent’s case, their tax bill would increase at basically every AGI level between $15,150 and about $560,000. Only extremely high-income single parents would save a huge amount from Trump’s tax cuts–which sort of defeats the purpose, right?
Cue all the sighs.