In a recent piece for CNBC, columnist Jake Novak highlighted one of the many ways young Americans will benefit from the bold tax reform plan introduced by the White House and top congressional leaders.
“That would be the plan to double the standard deduction for federal tax filers to $12,000 for individuals and $24,000 for married couples,” he wrote.
The current standard deduction allows individuals to shield the first $6,350 of their income from being taxed federally. Younger Americans who file their taxes, especially those who are not homeowners, are more likely to use the standard deduction rather than itemizing their deductions because they generally have fewer things to itemize and going through the itemizing process is kind of a hassle. Taking the standard deduction is way easier and simpler.
As Novak reported, under the new GOP proposal, filers using the standard deduction would be able to increase the amount of their income that isn’t subject to federal tax. That means more money to save, spend, put toward retirement, or pay down high student loan and credit card debt.
Or, as Novak suggests: “Perhaps with a massive standard deduction boost, millions of Americans will now be more able to raise the cash for a down payment and get into the home ownership club.”