Meet 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 Elieen. Eileen is a recent college graduate with student loans. She’s single, childless, and working in her first job out of college, making $41,000.
Without the new tax reform law, Eileen would take a personal exemption of $4,150, a standard deduction of $6,500, and an above-the-line deduction of $2,000 for interest she paid this year on her student loans. This means she only has $28,350 in taxable income, and would face a tax bill of $3776.25.
Under the new tax law, Eileen no longer has a personal exemption, but her standard deduction nearly doubles to $12,000, and she keeps her student loan interest deduction of $2,000. This means her taxable income is now $27,000, and her tax bill is $3,049.50. She will see a tax cut of $726.75, or 19 percent.
This money will make a big difference for someone like Eileen. She may use it toward her student loan balance, creating a retirement account, or buying airplane tickets to visit family. The choice is up to her, but the bottom line is, there will be more money in her bank account. That’s a good deal for Eileen, and a good deal for women like her.