The number of tax refunds for Americans with a household income between $250,000 and $500,000 rose by 5 percentage points this year, new IRS data shows.
Under the 2017 Tax Cuts and Jobs Act, lawmakers promised that Americans would get a tax break. Most of them did, with some big caveats: The benefits of the legislation weren’t conferred equally, and some upper-middle-class filers expecting refunds got a rude awakening instead.
Tax experts say this highlights some of the quirks — and shortcomings — of the new tax code and the manner in which it was rolled out. The standard deduction for married couples filing jointly roughly doubled to $24,000 for 2018, but the TCJA also eliminated personal exemptions and pared back or eliminated many itemized deductions.
Lawmakers’ push to get the TCJA passed in 2017 meant that the IRS faced tight deadlines for hammering out the details of how the new tax rules would be applied, and some aspects — particularly those relating to partnerships and certain types of business income and expenses — weren’t finalized in time for tax day.
The kind of income earned also makes a difference. Households in the $100,000 to $250,000 income bracket probably earn most, if not all, of their money via wages and salaries, but income streams get more varied as the amount increases, and that changes how it’s viewed by the IRS.
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