2017 Trump tax cuts make taxes lower — and easier to pay

Is tax season stressing you out? You’re not alone.

But it could be even worse.

You may know how the 2017 Tax Cuts and Jobs Act, or Trump tax cuts, lowered your tax burden — by more than $1,500 for an average family of four — and made it easier to file taxes by increasing the standard deduction and simplifying the tax code. You may also know that your taxes will go up unless Congress extends the TCJA by the end of this year.

But did you know the TCJA also made them simpler to pay?

The cost of IRS compliance — both in terms of hours consumed and out-of-pocket compliance costs — is a hidden tax we all pay, especially in April.

Consider how much you spend in productive hours and out-of-pocket expenses just filling out your tax returns.

CALCULATING THE COST OF TAX COMPLIANCE

The National Taxpayers Union found that in 2023, complying with the tax code cost Americans over 6.5 billion hours on recordkeeping, learning about the law, filling out the required forms and schedules, and submitting information to the IRS, among other tasks.

The NTU estimated that the total economic burden imposed by tax code compliance reached $414 billion. It likely would have been even higher had provisions of the TCJA not simplified tax compliance.

But we are entering a danger zone: If these provisions of the TCJA are not extended by the end of the year, not only will your cost of complying with the tax code go up, but your taxes will likely increase.

Here are three key areas of the TCJA that have simplified tax compliance:

1. DOUBLING THE STANDARD DEDUCTION

First, the TCJA simplified filing for many taxpayers by nearly doubling the standard deduction from $6,500 to $12,000 for individual filers and $13,000 to $24,000 for joint returns, increasing it every year to adjust for inflation.

Its effect on simplifying the tax code was dramatic and immediate: In 2017, nearly 50 million tax returns claimed itemized deductions, translating to 30.6% of individual tax returns.

Following tax reform in 2017, only 17.5 million individual tax returns, or 11.4%, claimed itemized deductions. The share of taxpayers itemizing has hovered around 10% since, compared to nearly 30% in previous decades.

In other words, taxpayers in droves — and the vast majority of middle-class workers — now choose the higher and simpler standard tax deduction option instead of complex tax loopholes.

2. REDUCING COMPLEX INDIVIDUAL DEDUCTIONS

In addition to expanding the standard deduction, the TCJA limited or eliminated many itemized deductions.

These deductions, such as the ones for fees on safe deposit boxes or tax preparation expenses, required extensive record keeping. Their elimination, made possible by the increase in the standard deduction, meant fewer receipts and less paperwork.

And since they were no longer needed on tax return forms, the forms themselves shrank.

3. REFORMING THE ALTERNATIVE MINIMUM TAX

The TCJA also reformed the alternative minimum tax, which means far fewer filers will need to spend time on the IRS form used to calculate the AMT.

Running parallel to the regular tax code, the AMT is a separate set of rules under which some households must calculate their tax liability a second time. If you had too many deductions under the old system, you had to pay a “minimum” tax under the alternative system and pay more.

Because of the changes made by TCJA, the Tax Policy Center projected that the number of AMT taxpayers fell from more than 5 million in 2017 to just 200,000 in 2018. Without an extension of the TCJA, that number will bounce back to its previous high.

Tax time is one of the most stressful (and costly) experiences we share. And polls show that most taxpayers prefer a simpler tax code.

Your voice is critical to keeping tax season less stressful by extending the 2017 Trump tax cuts.

Let your representatives know that you demand lower taxes and simpler tax returns!