2019 Tax Guide
You’re
44 MONEY.COM MARCH^2019
Middle Class
WHAT CHANGED?Most of us would like a tax cut. The new law
attempts to deliver that in several ways. One
is new, lower rates for several middle-class tax
brackets. For instance, workers who earn up
to $82,500 in taxable income will now pay a
top rate of 22%, compared with 25% under the
old rules. Perhaps an even bigger change,
however, is a dramatic increase in the amount
of money taxpayers who don’t itemize their
returns are allowed to exclude from their taxable
income in the first place. This sum, known
as the standard deduction, nearly doubles,
to $24,000 from $13,000 for couples and to
$12,000 from $6,500 for singles. The change
means most middle-class taxpayers will avoid
owing any income tax at all on thousands of
additional dollars that they earn.In addition to low-
ering what you owe,
lawmakers also tried
to make filing easier
by making good on a
long-term Republican
campaign pledge to
simplify tax forms—
even to the point
where they could fit
on a postcard. The re-
sult is that old forms
like the two-page
1040 and single-page
1040EZ have been
replaced with a new
version that takes up
just half a page, front
and back.WHAT YOU’LL SAVEThe doubled standard
deduction and lower
rates should translate
into a tax cut for most
middle-income Amer-
icans. Those earning
from $49,000 to
$86,000 will pay an
average $930 less un-
der the Tax Cuts and
Jobs Act than under
previous tax law,
according to the Tax
Policy Center, a Wash-
ington, D.C., think
tank. Still, a lot de-
pends on your individ-
ual situation. (See
table, at right.)
One big caveat: The
individual provisionsof the Tax Cuts and
Jobs Act are only tem-
porary. By 2026,
those savings start
to phase out.THE LIMITS OF
SIMPLICITYTax experts haven’t
necessarily been en-
thused with the new
tax postcard. That’s
because while it re-
duces the number
of lines on the IRS’s
flagship tax form, the
provisions of the tax
code they dealt with
haven’t gone away.
Taxpayers who receive
additional income or
owe the alternative
minimum tax, for in-
stance, must now
consult one or more
of six new schedules.
An even bigger is-
sue: These days only a
small minority still fills
out tax forms with pa-
per and pen, accord-
ing to the IRS. “This is
2019,” says Eric Toder,
codirector of the Tax
Policy Center.
The vast majority
of filers who use mod-
ern tax software (see
“How to File for Free”
to find out if you qual-
ify) should experience
no change at all.