Question

In 2018 and 2019 standard deductions were increased. What has been the impact of this? Overall, was it a good or bad idea? Explain

Answer 1

Standard deduction means deduction allowed on total income earned.

So that if the income earned by an individual $250,000

Standard deduction allowed by government was $40000

The net income will be ($250000 - $40000) = $210,000

If the government increase the standard deduction to $50000

The net income based on 1st example

($250000 - $50000) = $200,000

So that standard deduction increase it will benefited to income tax payers. In the given example tax payer benefited $10,000.

The impact on increase in standard deduction is good to tax payers.