How Donald Trump’s Tax Plan Affects Single Filers

President Donald Trump signed the most extensive tax overhaul in decades with the Tax Cuts and Jobs Act (TCJA) of 2017.

But how do the many changes in the law specifically affect single taxpayers who file individual returns?

This post analyzes the TCJA’s impact on key areas for single filers – tax rates, deductions, exemptions, and more.

Understanding these changes provides singles clarity on how Trump’s tax plan influences their individual liability and refunds.

Lower Tax Rates

Single filers benefit from the TCJA’s across-the-board tax bracket reductions [1]:

• All seven federal income tax brackets had rates lowered by 1-4 percentage points.
• For example, the top rate of 39.6% dropped to 37% for singles earning $500,000+.
• Singles earning $9,525-$38,700 fall into the lowest 12% bracket, down from 15%.
• But the individual tax rate cuts expire after 2025 under the law.

These temporarily lower rates result in singles owing less in income taxes until the 2025 expiration.

Higher Standard Deduction

The near doubling of the standard deduction also helps singles [2]:

• The standard deduction for singles rose from $6,350 to $12,000 under the TCJA.
• This higher deduction lowers the taxable income base for singles taking it instead of itemizing.
• Roughly 90% of taxpayers are expected to take the standard deduction after the increase [3].

Significantly fewer single tax filers will opt to itemize going forward.

No Personal Exemption for Dependents

While raising the standard deduction, the TCJA eliminated the $4,050 personal exemption singles could claim for dependents [4]:

• Previously, singles supporting elderly parents or adult children could reduce taxable income through exemptions.
• For singles with no children, this change has no impact.
• But for single parents or those supporting dependent relatives, losing the exemptions raises taxes.

Singles with no dependents avoid this tax increase.

Higher Child Tax Credit

The doubling of the child tax credit benefits single parents [5]:

• The maximum credit per child went from $1,000 to $2,000.
• Higher phase-out thresholds make more income eligible for the full credit amount.
• Refundability increased from $1,100 to $1,400 per child, aiding lower-income singles.

Since the credit doubles and covers more income, single parents see substantial tax relief.

State and Local Tax (SALT) Deduction Cap

The new $10,000 cap on state and local tax (SALT) deductions negatively impacts singles in high-tax states [6]:

• Previously, singles with high state income and property taxes could deduct them fully.
• Now the deduction is limited to $10,000, harming singles in states like New York and California.
• A $10,000 property tax bill alone could exceed the cap for many metro area singles.

For high-earning singles in high-tax states, the SALT cap significantly increases federal taxes.

Mortgage Interest Deduction Limit

Changes to the mortgage interest deduction could impact singles with pricier homes [7]:

• Interest on mortgages up to $750,000 can now be deducted, down from $1 million previously.
• This affects single homeowners with larger mortgage balances above $750,000.
• The change is minor for most single homeowners with moderate mortgage debt.

Singles carrying jumbo mortgages over $750,000 lose more advantageous treatment.

Conclusion

Donald Trump’s tax reforms create winners and losers among single filers depending on individual circumstances. Single parents and moderately-earning W2 employees without major assets often benefit from increased credits and broader standard deduction eligibility under the TCJA.

But higher-income single homeowners in states like California and New York face tax hikes from lost exemptions and deduction limits. Single filers across the board face uncertainty as many provisions expire in coming years.

While effects vary at the micro level, the TCJA clearly showered the most enduring tax relief on married joint filers and corporations rather than individuals.

References

[1] https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/

[2] https://www.efile.com/tax-help-guides/trump-tax-plan-single-taxpayers/

[3] https://www.jct.gov/publications/2017/jcx-62-17/

[4] https://www.hrblock.com/tax-center/filing/dependents/how-losing-tax-exemptions-may-affect-you/

[5] https://www.bankrate.com/taxes/how-the-child-tax-credit-works/

[6] https://www.policygenius.com/taxes/who-benefits-most-from-the-salt-tax-deduction/

[7] https://www.nerdwallet.com/article/mortgages/mortgage-interest-deduction-changes-new-tax-law