This week IWF will be running a series featuring profiles of different American women and how they will be affected by the latest tax reform legislation. Special thanks to analysts at The Tax Foundation, who provided the calculations for each profile.
Today, meet Julia. Julia is single and works as a waitress, making $19,000 annually. She has no children, and she rents her current home. Without the tax reform law, Julia would expect to pay $835 in federal income taxes because she can take a standard deduction of $6,500 and a personal exemption of $4,150. This leaves her with $8,350 in taxable income, which would be taxed at 10 percent.
Under the new tax law, Julia will save money. The personal exemption is eliminated, but the standard deduction nearly doubles to $12,000. This means Julia only has $7000 in taxable income and a tax bill of $700.
Julia’s $135 in savings may not seem like a lot, but considering her income level and relatively small federal income tax burden, it makes a difference. It’s a 16 percent tax cut. Given so much rhetoric about how the new tax law will enrich the wealthy at the expense of the poor, it’s at least worth pointing out that the changes to the individual tax code will not harm Julia. In fact, she gets to keep more of her hard-earned money. That’s a good deal for Julia, and a good deal for women like her.