Despite changes to U.S. tax laws intended to lower rates for most Americans, taxpayers may end up owing the IRS more over the coming years.
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The tax agency implemented a new method for gauging inflation on Thursday – as mandated by the Tax Cuts and Jobs Act – which will actually raise tax payments, and government revenue, when compared with the measure previously used, The Wall Street Journal reported.
The new tax law required the IRS to transition to a slower-moving measure of inflation, which will affect more than 60 tax provisions next year – to account for rising prices. This means that things like the standard deduction will increase more slowly.
For example, the Joint Committee on Taxation (JCT) told the Journal that a married couple’s standard deduction in 2019 will be about $150 lower – at $24,400 instead of $24,550 – under the new model when compared with the old. That gap that will only widen over time.
The JCT forecast that Americans will collectively pay $133.5 billion more over 10 years as a result of the transition.
The changes are applicable for the tax year beginning Dec. 31, 2018.
Additionally, some taxpayers are at risk of seeing their dues rise regardless of the IRS’ new adjustment.
Those individuals include some homeowners, itemizers and certain categories of business owners.