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Standard deduction tweak will cut taxes for many

Under the new tax law, would a single person in Medford making $30,000 a year pay more in taxes or less? Would a family of four with an income of $40,000 pay more or less. Good luck with this one.

— Warren C., Medford

Indeed, Warren, good luck to all of us in figuring this out. There is no simple, direct answer to your question, but chances are in both cases the taxpayer will see relief in tax year 2018.

As you might expect, even a simplified approach to a tax code change produces a lot of questions. Remember, however, for most everyone, nothing will change until 2018 filing.

In general, the new law will lead more people to go with the short form tax federal return, taking the standard deduction, because they don't have enough deductions to itemize.

The standard deduction for an individual taxpayer doubles to $12,000 and for a married couple to $24,000 under the new tax plan.

The bottom line is that most filers will pay less income tax in 2018 than in 2017.

A higher standard deduction will lead to fewer itemized returns, Medford CPA Fred Johannsen told us. Individual and family results will vary on a case-by-case basis.

For singles with no dependents, seeing the standard deduction nearly doubling to $12,000 from $6,500, there will almost certainly be tax savings for someone earning $30,000.

Once you enter joint filing with children, there is no one-size-fits-all answer.

The $4,150 exemption for every member of the household has gone away. But a couple filing a joint return will see their standard deduction rise to $24,000 from $13,000.

For a married couple with two children, as in your question, they will come out with an additional $1,350 in deductions. Joint filers with more children, who aren't itemizing, may lose ground. But for such families, itemizing with mortgage interest and the availability of the $2,000 credit per child under 17, they will likely pay less.

In some cases, where taxpayers won't benefit by itemizing on their federal return, they will still want to itemize for their state tax return. That's because the state's standard deduction differs from the federal deduction.

While the income tax withholding may decline, Social Security and Medicare contributions will still take major bite out of many paychecks.

— Send questions to “Since You Asked,” Mail Tribune Newsroom, P.O. Box 1108, Medford, OR 97501; by fax to 541-776-4376; or by email to youasked@mailtribune.com. To see a collection of columns, go to mailtribune.com/youasked. We’re sorry, but the volume of questions received prevents us from answering all of them.