Question

What are three significant changes to the current Internal Revenue Code from the Tax Cuts and Jobs Act of 2017? please explain these changes in your own words. Please state how these changes will affect taxable income and whether or not you think these changes are an improvement to the tax code.

Answer 1

Question 1- What are three significant changes to the current internal revenue code from the tax cut and jobs act of 2017 ?

Answer -

The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made several significant changes to the individual income tax. These changes include a nearly doubled standard deduction, new limitations on itemized deductions, reduced income tax rates, and reforms to several other provisions. In all, these changes simplify the individual income tax by eliminating the need for millions of households to itemize their deduction.

Key Findings

• The Tax Cuts and Jobs Act of 2017 made several significant changes to the individual income tax, including reforms to itemized deductions and the alternative minimum tax, an expanded standard deduction and child tax credit, and lower marginal tax rates across brackets.
• These changes simplify the individual income tax for millions of households, as 28.5 million filers would be better off taking the newly expanded standard deduction, instead of itemizing various deductions, reducing compliance costs.
• The Internal Revenue Service estimates the average time to complete an individual tax return will decrease by 4 to 7 percent. Converting this to dollar terms, we estimate compliance savings could range from $3.1 billion to $5.4 billion

Question -2 state how these changes will affect taxable income and wether or not you think these changes are an improvement to the tax code?

The Tax Cuts and Jobs Act made significant changes to individual income taxes and the estate tax. Almost all these provisions expire after 2025, while most business provisions are permanent.

The new tax law made substantial changes to the tax rates and the tax base for the individual income tax. The major provisions follow, excluding those that only affect business income.

TAX RATES AND TAX BRACKETS

The Tax Cuts and Jobs Act (TCJA) reduced statutory tax rates at almost all levels of taxable income and shifted the thresholds for several income tax brackets (table 1). As under prior law, the tax brackets are indexed for inflation but using a different inflation index (see below).