If approved, a new bill would increase tax deductions up to $4,000 for Americans
The Bill That Would Increase Tax Deductions
If approved, a new bill in Congress would temporarily increase tax deductions up to $4,000, compared to the current $2,000 for taxpayers. This would allow for a lower tax bill and lower taxable income for eligible taxpayers. HR 3936, also known as the Tax Cuts for Working Families Act, was introduced by Rep. Jason Smith last week in the hopes of helping to alleviate the effects of inflation.
The act would change the standard tax deduction by lowering the taxable income of those qualified. Unfortunately, the bill is not applicable to everyone. For the IRS, there are certain instances where taxpayers are not allowed to receive standard tax deductions. The current bill introduced by Smith cannot change the IRS policies on standard deductions.
HR 3936’s Chances For Approval
The Tax Cuts for Working Families Act centers around the notion of the increase in standard tax deductions for the next two years, both of which are tax returns that are due in 2025 and 2026.
Wealthier taxpayers would possibly receive little to no tax deduction but the Act adjusts for those who have their gross income adjusted. In short, if your MAGI in the next two years is larger than the given threshold, your deduction will be less than the amounts for married households, heads of the family, and single taxpayers.