Standard Deduction Research Articles

Standard deduction for children for personal income tax: innovations in 2025

The study considers amendments to the Tax Code of the Russian Federation that change aspects of the provision of a standard tax deduction for children when calculating personal income tax, which applies to all organizations (including medical ones) that attract employees or persons under civil law contracts. An analysis of innovations in 2025 in this area was carried out — an increase in the size of the deduction for the second and subsequent children, an increase in the level of marginal income, if exceeded, the deduction will not be provided. It is noted that innovations are introduced not only in terms of the size of the deduction and limit limits when it is provided, but also in the part concerning the procedure for its provision — if a written statement of the taxpayer was previously required, then from 2025 the deduction will be provided without it if the tax agent has information about the dependent children of the taxpayer — for this, the employee provides one-time documents confirming the right to this deduction. Examples of calculating the size of the standard tax deduction for children according to the old and new rules are given.

More Tax, Less Refi? The Mortgage Interest Deduction and Monetary Policy Pass-Through

We study how the mortgage interest deduction (MID) affects refinancing. Households who deduct mortgage interest from their taxes face a lower post-tax mortgage rate, reducing the interest savings from refinancing net of taxes. We estimate the effect of the MID on refinancing using the Tax Cuts and Jobs Act (TCJA) of 2017 as a natural experiment. The TCJA doubled the standard deduction, reducing MID uptake and value. We show that, following the TCJA, the refinancing rate amongst households who lose the MID increased by 25%. Our results suggest that reducing the MID may improve the pass-through of monetary policy when rates fall.

TOP MANAGEMENT ROLE IN ENSURING SUSTAINABLE SUPPLY CHAIN MANAGEMENT PRACTICES: EXPLORATORY REVIEW OF LITERATURE

Purpose: Top management plays a crucial role in implementing Sustainable Supply Chain Management (SSCM) practices, especially in developing countries, by driving performance, securing resources, and promoting necessary changes. This study explores how top management's commitment and strategic leadership impact SSCM adoption and implementation in developing countries like Ghana, where SSCM adoption rates are low and empirical research is lacking. Method: Using a qualitative research design and a systematic literature review from the SCOPUS database, the study analyzes peer-reviewed studies from 2010 onwards. Results and Conclusion: Findings reveal that top management's commitment to sustainability fosters organizational responsibility, innovation, and compliance with ethical standards, encouraging proactive approaches to opportunities, market adaptation, and green practices. Research Implication: These insights provide practical recommendations for improving performance, building trust, and achieving sustainable development goals, contributing significantly to the understanding of SSCM practices and their positive impact on organizational performance. Originality/Value: By leveraging empirical work this study builds analytical patterns on issues that relate with management roles and sustainable supply chain management. The standardized assessment of the issues provides a trustworthy result as this study does not entirely rely on the exclusive opinion of the researchers but is based on standard deduction of the role of managers in ensuring the adoption of sustainable supply chain management within industries.

Peculiarities of the activities of local self-government bodies in united territorial communities under martial law

Peculiarities of the activities of local self-government bodies in united territorial communities under martial law

DONOR-ADVISED FUNDS IN THE WAKE OF THE TAX CUTS AND JOBS ACT

Donor-advised funds (DAFs) are conduits for charitable giving that support immediate tax deductions while creating a reservoir of assets for subsequent disposition to end-use charities. The number of new DAF accounts has skyrocketed in the wake of the 2017 Tax Cuts and Jobs Act (TCJA). This Article presents evidence suggesting that bunching charitable contributions to more fully exploit the TCJA-enhanced standard deduction likely motivates much of the onslaught of new DAF accounts established since 2016 and argues that the typical buncher is likely to differ from other DAF account holders in ways that matter from a policy perspective. Thus, while DAF critics have generally focused on the unproductive accumulation of assets in DAF accounts and have advanced reforms aimed at speeding up DAF payouts, this Article argues that in the context of bunchers, unproductive accumulation of assets in DAF accounts is unlikely to be a major problem. The more significant problem with DAF-facilitated bunching is that the cost to the public fisc is unlikely to be justified by incremental charitable giving. Thus, while this Article concludes that regulation targeting DAF payouts is unobjectionable, it argues that a wholly different set of reforms targeting the deductibility of charitable giving generally would be needed to address the cost of DAF-facilitated bunching under current law and under thoughtfully reformed laws involving universal charitable deductions above a floor.

Perception of Taxpayers Regarding New Income Tax Structure

Taxes are a crucial source of funding for government operations and one of the factors that determine a nation's ability to prosper economically. Taxes are monetary or other obligations that must be paid for a government to function. In India, taxes are divided into direct and indirect taxes, and they can be paid in cash or in the labor equivalent. Unlike indirect taxes, which affect disposable income indirectly. Income tax is a significant source of money and a powerful tool for reducing economic inequality. A tax levied on people or organizations that have different levels of income or taxable income is known as an income tax. The tax that the income tax division collects for the central government. India's tax-to-GDP ratio stood at 17–17.5 percent up till 2018–19. In India, the overall amount of taxes paid makes a significant contribution. By the end of January 2020, the government had received Rs. 7.52 lakh crore in direct taxes. Although while the Indian tax system has undergone significant improvements, it is still very far from being ideal. Many issues, including tax evasion, illicit income, and the existence of an analogous economy, show that the Indian tax system needs important reforms in the near future to address all these issues. The new income tax structure will help those who make modest investments. With the new tax system's seven lower-income tax slabs, everyone paying taxes without claiming tax deductions can benefit from paying a reduced rate of tax. The standard deduction benefit is extended to the new tax regime as well as the increase in the refund limit to Rs. 7 lakhs under the new income tax structure. The highest surcharge rate under the New Tax Regime has been decreased from 37% to 25%, making this choice the default tax regime. This study's objective is to investigate how taxpayers perceive the new income tax system based on four factors: tax compliance, tax awareness, tax evasion behavior, and tax complexity. Both the questionnaire approach and the descriptive analysis approach are utilized while gathering primary data. In this study, both secondary and primary data are utilized.

US Taxation of Gambling Winnings and Incentives to Bet

Sports betting is growing rapidly in the US after its legalization by the Supreme Court in 2018. This paper describes the treatment of gambling winnings and losses in the federal tax code and shows how the system may incentivize some gamblers to substantially increase the scale of their betting in order to have a chance to win. This incentive stems from the fact that gambling losses can only be deducted if taxpayers are filing for itemized deductions, meaning the scale of gambling losses has to be large enough to push a taxpayer’s eligible deductions over the standard deduction. This incentive to engage in large-scale betting applies mostly to lower and middle-income households.

Too Much SALT? The Nuanced Impact of the State and Local Tax Deduction Cap on Pass-Through Business Taxpayers

Perhaps the most controversial provision of the Tax Cuts and Jobs Act of 2017 is the state and local tax deduction limitation (or SALT cap), particularly with respect to how the cap impacts pass-through entities in high-tax states. This particular provision of the tax law has been criticized by opponents as deliberately punitive to small businesses in blue states, while proponents maintain that eliminating the SALT cap would primarily benefit high income taxpayers. Politicians from blue states have called for the repeal of the SALT cap, and some states have enacted various workarounds with questionable prospects of success. Still, many taxpayers will not benefit from a SALT deduction irrespective of the SALT cap, particularly taxpayers that either take the standard deduction or are subject to the alternative minimum tax (AMT). We examine the developing law around the SALT cap and provide descriptive empirical evidence of its disparate impact on closely held business taxpayers. Consistent with prior economics literature, we find that the impact is indeed most pronounced among high-income taxpayers in blue states. However, we note that the impact is substantially less than the furor over the limitation would suggest because many high-income taxpayers are subject to the AMT and so are not significantly affected by the limitation. These findings suggest two underemphasized points. First, the imposition of the SALT cap was not the drastic financial hit to blue state taxpayers that policy makers and commentators have suggested. Second, with a new administration that favors eliminating the SALT cap, Congress could consider whether the repeal of the cap alone is enough because further changes would be needed to return the SALT deduction to its earlier prominence.

Two methods for motivating faculty giving

In 2020, the combination of fear of illness due to the COVID-19 pandemic, volatility of the financial markets, violence, social isolation and political unrest left many Americans shaken. These difficulties certainly affected university faculty members, who, in addition, often had to pivot to online delivery and administration. A natural response, when facing adversity, is to reduce charitable giving in order to save for emergencies of personal or family need. This choice might also reduce charitable giving by faculty members to the universities where they teach. In addition, faculty members might personally still be adjusting to the tax changes implemented by the Tax Cuts and Jobs Act (TCJA) of 2017. TCJA essentially doubled the standard deduction available to US taxpayers. Because of the increase, fewer faculty members are itemising deductions. Therefore, these faculty members no longer receive any federal tax benefit from making charitable contributions. To motivate charitable giving among university faculty, university foundations and departments of advancement should educate faculty members about the tax saving strategies of philanthropic giving to their universities by making qualified charitable distributions directly from retirement accounts and/or using donor-advised funds.

TAXPAYER CHOICES, ITEMIZED DEDUCTIONS, AND THE RELATIONSHIP BETWEEN THE FEDERAL & STATE TAX SYSTEMS

Almost 30 million taxpayers who itemized their federal deductions for the 2017 tax year switched to the standard deduction for 2018. The provisions of the Tax Cuts & Jobs Act (“TCJA”) that led to this shift were intended to simplify the individual income tax system. This Article’s empirical study of federal and state tax filing data, however, demonstrates that the TCJA’s simplifying effect varied state-to-state depending on whether a state obligated its taxpayers to make the same choice for state tax purposes (i.e., to itemize deductions or take the standard deduction) as the taxpayer made for federal purposes. In states that obligated taxpayers to make the same choice, taxpayers experienced at least some simplification, and tax administration by the IRS and state tax authorities became materially easier, although the IRS’s simplification benefit was dampened to some degree. In states that allowed taxpayers to make state tax choices that differed from their federal choices, the TCJA’s simplifying effect for many taxpayers was largely illusory, state income tax administration actually became more complex, and some tax enforcement costs were, in effect, shifted from the IRS to state tax authorities. Thus, this Article’s study reveals that state-level rules about tax choices undermined the federal policy goal motivating the TCJA’s itemization-related changes.
 A taxpayer’s choice whether to itemize is just one of many tax elections explicitly provided to taxpayers. Accordingly, this Article’s study of taxpayers’ itemization choices also serves as an example that illustrates a broader point—state-level rules about whether taxpayers must make uniform federal and state tax elections create important, but previously underappreciated, interactions between the federal and state tax systems. Policymakers cannot fully understand the policy implications of many federal tax law changes unless they appreciate these federal/state interactions. This Article helps policymakers do so.

Tax policy and charitable giving: an evaluation of the Tax Cuts and Jobs Act 2017 and its impact on charitable contributions

Studies of how the Tax Cuts and Jobs Act 2017 will affect charitable giving narrowly focus on the increase in the standard deduction. Based on these studies, the media and policy analysts warned that the Tax Cuts and Jobs Act would lead to a sharp decrease in charitable giving. However, these predictions did not fully account for some of the nuances in the tax code and the political economy of changes to tax policy. We explain that a richer analysis includes the political response of interest groups. Tax provisions other than changes to the standard deduction, such as an increase in the adjusted gross income limit, mean that the Tax Cuts and Jobs Act may change the composition of giving but that it is unlikely to have a large impact on overall giving. To supplement our analytical narrative, we present statistics on the pattern of charitable giving and estimate a predictive autoregressive model of overall charitable giving. The results show that the change in giving after the implementation of the Tax Cuts and Jobs Act cannot be distinguished from zero. We conclude that misleading interpretations about the effect of the Tax Cuts and Jobs Act on overall charitable giving are due to the omission of political economy from the analysis.

Indirect Federal Subsidy and Tax Exportation through State and Local Tax Deduction: Understanding the Impact of the 2017 Tax Reform on State and Local Governments

Abstract The deduction of certain state and local taxes (SALT) from the U.S. federal income tax base provides substantial amounts of indirect federal subsidy to state and local governments and also allows cross-state exportation of deductible state and local taxes. The Tax Cuts and Jobs Act of 2017 (TCJA) limits the SALT deduction and increases standard deduction per filer each year. This study examines the impact of TCJA on the distribution of this indirect federal subsidy and exportation of major state and local taxes. Using individual income tax data from the Internal Revenue Service, this research shows that the law narrows the disparity in states’ receipt of the indirect federal subsidy and reduces the capacity of high-tax states to export their taxes to other states. The findings shed light on the continued debate regarding the effectiveness and fairness of this important type of intergovernmental transfer in the United States.

THE CASE FOR OVER-WITHHOLDING FEDERAL INCOME TAX: BENEFITS TO LOW-INCOME TAXPAYERS

The W-4 tax withholding form has been used by individual taxpayers for decades to calculate their tax withholdings. It is based, however, on the faulty assumption that most U.S. workers have a single source of income. This assumption has caused millions of taxpayers to incur unnecessary tax debt. The formula for calculating federal income tax withholding for employees routinely under-withholds for low-income workers who have multiple sources of income because, without substantial documentation and calculation by the employee, employers withhold as if they are the employee’s single source of income. Taxpayers may therefore see their income tax withheld at too low a marginal rate, oftentimes zero percent, and can have significant balances due on short notice at the end of the tax year.This Note documents that reality and proposes a solution. It proposes a reconception of the Form W-4 and the withholding formula through the lens of low-income filers and aims for a policy of over-withholding from those filers in order to reduce surprise tax due and related penalties. The proposed solution removes the bias towards achieving a “zero refund” from the form design by eliminating the tax-free threshold—for most filers, the equivalent of their standard deduction—from the withholding scheme. As discussed in the Note, the proposed policy would also have the benefit of increasing tax compliance, minimizing bureaucratic burdens, and providing a revenue-neutral solution for the government. This Note further suggests an extension of the proposed policy to provide a much-needed savings mechanism for low-income filers.

Make Athletes Pay More Again: An Analysis of Jock Tax Issues following the 2017 U.S. Tax Reform

In 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law. Considered the largest tax overhaul in three decades, TCJA reduced federal individual and corporate income tax rates and doubled the standard deduction for all individual tax returns. However, the new law also removed items that traditionally helped professional athletes subject to nonresidential income taxes or ‘jock’ tax. In particular, professional athletes playing in states and local municipalities that implement jock taxes saw their federal taxes increase due to TCJA limiting their ability to claim nonresidential state and local taxes (SALT) or unreimbursed businesses expenses as itemized deductions in order to reduce their federal taxable income. As such, individuals paying jock taxes will have higher federal tax bills until TCJA expiration in 2025. The purpose of this project is to explore the overall impact TCJA has on professional athletes and how one can mitigate its issues.

Employer provides a standard tax deduction on individual income tax per child — student full-time courses to 24 years

In article aspects of granting by the employer to the employee of a standard tax deduction on an income tax on the child of full-time courses, the graduate student, the intern, the student, the cadet aged up to 24 years are considered. The amount of these deductions has been considered, the conditions for obtaining this deduction by the employees of the company have been analyzed, the documents on the basis of which this type of deduction is provided have been disclosed, the peculiarities of the deduction in cases when the child is 24 years old in the current year (the period from which deductions are not provided), the peculiarities of the deduction in case the child is disabled in group I and II have been considered. Practical examples are given.

Introduction

Introduction

Time for a Tax Return Filing Fee

The IRS faces the monumental task of verifying, to the extent possible, the tax consequences reported on the hundreds of millions of tax returns filed each year. It does so with meager and shrinking resources. Some taxpayers burden the filing system more than others. At one extreme, a taxpayer who earns only income that is subject to third-party reporting and withholding and who claims the standard deduction adds very little to the IRS’s burden. At the other end of the extreme, a large business engaged in numerous complex transactions the tax treatment of which are not free from doubt demands significant resources if that taxpayer’s claimed tax outcomes are fully examined. In light of this landscape, this Article makes the novel proposal that Congress require payment of a tax return filing fee by some taxpayers. The amount of the fee would vary based on some of the factors that make each taxpayer more or less difficult to audit, with carve-outs for difficult-to-audit items that are disproportionately claimed by lower-income individuals. The goals of the proposal are three: first, to make the system fairer, second, to raise additional revenue, and third, to improve efficiency by encouraging taxpayers to take into account the costs imposed on the tax administration system by their complex transactions.

The Effect of the Tax Cuts and Jobs Act on the Housing Market

The Tax Cuts and Jobs Act of 2017 (TCJA) reduced the incentive for households to claim itemized deductions that subsidize homeownership and simultaneously lowered income tax rates. We use an equilibrium model to quantify the effects of the TCJA on house prices, homeownership, and welfare. The reform removes the tax subsidy to owner-occupied housing for most households, who now choose to claim the standard deduction. However, over-consumption of tax subsidized housing by the remaining wealthy itemizers persists. Wealthy households benefit the most from this large tax cut, so the TCJA is a regressive policy that increases welfare inequality.

Misguided Relief: the Real Property Tax Addition to the Standard Deduction

A recent temporary addition to the standard deduction distributes a limited tax benefit to a subset of nonitemizing taxpayers based on real property tax payments. The provision sacrifices some of the standard deduction’s simplicity, costs more than a billion dollars annually and makes inequitable distinctions. Congress should fail to renew it.

Retrenchment, Temporary-Effect Legislation, and the Home Mortgage Interest Deduction

There are several sacred cows in the Internal Revenue Code, but perhaps none quite as sacrosanct as the home mortgage interest deduction. U.S. Treasury Secretary Steve Mnuchin has characterized the mortgage interest deduction as so beloved by the American people that it is “kind of like apple pie.” Reform of the home mortgage interest deduction has been described as the third rail of tax reform, in that “touching the [mortgage interest deduction] is not just treasonous but ruinous.” That is, until December 22, 2017 when the Tax Cuts and Jobs Act of 2017 was enacted. And though the change to Section 163 may not seem significant by its own terms, its interaction with other changes to the Internal Revenue Code will result in profound change: the reduction of the home mortgage interest cap to $750,000 from $1 million will interact with the provision capping state and local property, sales, and income tax at $10,000, and the almost-doubled standard deduction. The obvious effect will be fewer homeowners itemizing their home mortgage interest deduction: an estimated 44% of taxpayers received the benefit of the home mortgage interest deduction under prior law, and it is anticipated that this number will drop to less than 15%. Notably, the Tax Cuts and Jobs Act of 2017 continues a process of temporary-effect lawmaking—the changes to the home mortgage interest deduction expire in eight years unless extended by Congress. The use of temporary-effect legislation that came into vogue during the administration of George W. Bush has been the object of scathing critique, with a prevailing view that such legislation is generally little more than a manipulation that allows the cost of legislation to be distorted. This Article considers the advantages of temporary-effect legislation through the lens of an entrenched tax expenditure, namely the home mortgage interest deduction. The Article models the impact of the home mortgage interest deduction upon the returns of several different taxpayers, under both prior and current law. A problem is illuminated in that both the previous and present approaches are broken: a pernicious regressive subsidy has been exacerbated, and a drip-feed of upper- and upper-middle class welfare benefits delivered through the Internal Revenue Code continues. Consequently, the Article explores the anathema of temporariness to address retrenchment to fix this tax expenditure, and balances the negative externalities that flow from renewal uncertainty against long-term policy implications. The ambition of this Article is to evaluate the recent changes to the home mortgage interest deduction both from a tax policy perspective and to also consider the politics and processes that are drivers—and so Section V suggests that it is time to pivot. Temporary-effect legislation has created a window during which it is feasible to retrench the entrenched home mortgage interest deduction from the Internal Revenue Code, with little political cost, and replace the deduction with a targeted tax credit to subsidize homeownership.