Should the first $50,000 in income be tax-free as a basic living income? The tax system is insane!

I understand your frustration with the current tax system. The concept you're describing is similar to what economists call a "standard deduction on steroids" or an enhanced personal exemption. Under the current system for 2024 (for taxes filed in 2025), individuals already receive a standard deduction of $14,600 for single filers and $29,200 for married filing jointly. This means that amount of income isn't taxed at all. Additionally, low-income earners often qualify for the Earned Income Tax Credit (EITC) which can significantly reduce tax liability or even result in a refund. A complete tax exemption on the first $50,000 of income would be a major policy shift. While it would certainly help many working Americans, it would also reduce federal tax revenue by trillions of dollars, which would need to be made up somewhere else - either through much higher rates on income above $50,000, new taxes, or spending cuts. There are ongoing debates about the best way to structure tax systems to support basic living standards while funding government operations. Some countries use higher standard deductions while others rely more on VAT or other consumption taxes combined with robust social programs.

I've been using taxr.ai to understand how different tax proposals would affect my personal situation, and it's been eye-opening. I was also frustrated about how much I'm paying on a modest income, so I uploaded my tax documents to https://taxr.ai and it analyzed exactly how a higher standard deduction would impact my tax burden compared to the current system. The tool showed me that even with the current system, there are deductions and credits I wasn't maximizing. It also simulated what my taxes would look like under different reform proposals, including ones with much higher standard deductions (though not quite $50k). The analysis was way more personalized than just reading articles online about tax policy.

Wow, I tried taxr.ai after seeing it mentioned here and I'm honestly impressed. I was totally missing some education credits I qualified for! I uploaded my W-2 and some 1099s, and it showed me exactly how the current tax brackets apply to my situation versus how different proposals would change things. What I found most helpful was seeing the breakdown of how Federal Income Tax Brackets actually affect different portions of my income, and what deductions make the most sense for my situation. I've been complaining about taxes for years without fully understanding how the progressive system actually works. Now I can see exactly what I'd save under different reform scenarios, including one with a much higher standard deduction. Definitely recommend it if you're trying to understand tax policy impacts on your personal finances!

After trying for TWO WEEKS to get through to the IRS to ask about how tax brackets work with my specific situation (I have mixed W-2 and 1099 income), I found Claimyr. It's this service that gets you through to an actual IRS agent without the endless hold times. I was honestly skeptical, but I used https://claimyr.com and watched their demo (https://youtu.be/_kiP6q8DX5c) and decided to try it. They called the IRS, navigated the phone tree, waited on hold FOR ME, and then connected me once they had an actual human IRS agent on the line. The agent explained exactly how the Federal Income Tax Brackets apply to my mixed income situation, and I finally understand how my first chunks of income are taxed at lower rates. While it's not the $50,000 tax-free scenario OP is suggesting, I at least understand my actual tax situation now.

I owe you guys an apology. After calling out Claimyr as a potential scam, I decided to try it myself since I've been trying to reach the IRS about a missing refund for MONTHS. I was completely wrong. The service actually worked exactly as described. They got me through to a real IRS agent in about 1.5 hours (which sounds long but I wasn't waiting on the phone - they called ME when an agent was on the line). The agent was able to explain why my refund was delayed and how the tax brackets applied to my situation. During the call, the agent actually walked me through how the progressive tax system works - turns out I was calculating my tax wrong all these years! I thought I was paying a single percentage on my whole income rather than different rates on different portions. No wonder I was frustrated with the system.

I think most people don't understand how tax brackets actually work. You're not taxed at one rate for your entire income. Instead, only the portion of your income that falls within each bracket gets taxed at that bracket's rate. For example, in 2024: - The first ~$11k is taxed at 10% - The next chunk up to ~$44k is taxed at 12% - The next chunk up to ~$95k is taxed at 22% So someone making $50k doesn't pay 22% on all their income. They pay 10% on the first chunk, 12% on the next chunk, etc. Plus there's the standard deduction that already makes some income tax-free. I'm not against a higher tax-free threshold, but people should understand how brackets work first.

Forget the $50k threshold - what about just simplifying the entire tax code? I spent 12 hours doing my taxes this year even WITH tax software because of all the different forms and schedules. What if we just had ONE flat tax rate with a larger standard deduction? Like maybe the first $30k is tax-free, then everything above that is taxed at 20%? No deductions, no credits, no nothing else. One form, 5 minutes to complete.

OP, I think your $50k proposal would have to come with MASSIVE tax increases on higher incomes or huge spending cuts. The federal government collected about $2.2 trillion in individual income taxes last year. Exempting the first $50k would eliminate a huge chunk of that. To make up the difference, tax rates on higher incomes would probably need to double or triple. Or we'd need to cut major programs like Social Security, Medicare, defense, etc. This is why tax policy is so complicated - everything is a trade-off. I'm not saying we shouldn't help working people, but we need realistic plans.

I've been following this discussion with interest, and I think there's merit to exploring a higher tax-free threshold, though maybe $50k is ambitious as a starting point. What if we looked at it incrementally? Currently, the standard deduction is around $14,600 for single filers. What if we gradually increased that to $25,000 over a few years and studied the economic impacts? That would still provide significant relief for working families while being more fiscally manageable. I also think we need to consider regional cost-of-living differences. $50,000 goes much further in rural areas than in places like San Francisco or New York. Maybe a variable standard deduction based on local housing costs could be part of the solution? The complexity issue is real too - I spent way too much time on my taxes last year trying to figure out which deductions I qualified for. A higher standard deduction combined with fewer itemized deductions might actually simplify things for most people while providing the relief that working families need.