Why did the government double the standard deduction and what was the impact?

Thanks for the explanation! But I'm a little confused - if the government is collecting less in taxes, doesn't that create a bigger deficit? Was there something else that was supposed to offset this revenue loss?

The revenue loss was actually a deliberate policy choice. The theory was that lower tax rates and simplified filing would stimulate economic growth, which would eventually generate more business activity and potentially more tax revenue in the long run. This is sometimes called "dynamic scoring" - the idea that tax cuts can partially pay for themselves through increased economic activity. While the deficit did increase following the tax law changes, there's ongoing debate about the long-term effects. Some economists argue the growth effects weren't as strong as predicted, while others point to pre-pandemic employment gains and business investment as signs of success.

Does this work if you have income from multiple states? I have a rental property in Florida and work in California, and figuring out which deductions apply where is driving me crazy.

I'm a bit skeptical... how does it handle things like charitable donations and mortgage interest? With the doubled standard deduction, I'm right on the edge where I'm not sure if itemizing is worth it anymore.

It absolutely works with multi-state income situations. I actually have a similar setup with income from both my main job and a side business in different states. The system automatically identified which deductions applied to which state and showed me the optimal filing strategy for both. For charitable donations and mortgage interest, it actually creates a side-by-side comparison showing exactly how much you would save by itemizing versus taking the standard deduction. In my case, it showed that I needed about $4,300 more in deductions to make itemizing worthwhile, and even suggested specific tax-advantaged charitable strategies I could use next year if I wanted to cross that threshold.

How does this service actually work? I don't understand how they can get you through to the IRS faster than just calling directly. Sounds too good to be true.

Yeah right. I've been trying to reach the IRS for months about how the standard deduction works with my business expenses. There's no way any service can magically get you through when millions of people are calling. This sounds like a scam to me.

The service works by using technology to navigate the IRS phone system and wait on hold for you. When they reach a live agent, they call you and connect you directly. It's not about "cutting the line" - they're just handling the hold time so you don't have to sit there. As for skepticism, I totally get it. I felt the same way at first. But the system actually works because they've figured out the best times to call and how to navigate the IRS phone tree efficiently. They don't provide any tax advice themselves - they just get you connected to the actual IRS where you can get official answers about things like how the standard deduction works with your specific situation.

That's a good point about the SALT cap! I'm in California and it definitely affected me. Do you know if they're ever planning to remove that cap? I heard something about it possibly changing.

The SALT cap is technically scheduled to expire after 2025 along with many other provisions of the Tax Cuts and Jobs Act, but what actually happens will depend on who controls Congress and the White House at that time. Democrats have pushed to eliminate or increase the cap, while many Republicans want to make it permanent. The interesting thing is that removing the cap mostly benefits higher-income taxpayers in high-tax states, which creates some awkward political dynamics. Studies show about 70% of the benefit of removing the cap would go to households making over $200,000. So while the doubled standard deduction was presented as helping middle and lower income families, the SALT cap was definitely targeting specific states and demographics.

You should definitely still track potential deductions! Plenty of people still itemize - typically those with large mortgage interest, major medical expenses, or substantial charitable giving. Run the numbers both ways. For 2025, you'd need deductions exceeding $14,600 (single) or $29,200 (married) to benefit from itemizing.

This is really helpful context! I'm curious about the "base broadening, rate lowering" approach you mentioned. Does this mean that even though people are paying less tax due to the higher standard deduction, the government made up some revenue by eliminating other deductions or credits? I'm trying to understand how all these pieces fit together - it seems like there were a lot of moving parts in that tax reform beyond just doubling the standard deduction.

Exactly! You're picking up on the key insight that this wasn't just about doubling the standard deduction in isolation. The Tax Cuts and Jobs Act was a massive overhaul with dozens of interconnected changes. On the "base broadening" side, they eliminated or limited several deductions that used to benefit higher-income taxpayers - like the personal exemption (which was worth $4,050 per person), miscellaneous itemized deductions subject to the 2% floor, and as mentioned, the SALT cap. They also limited the mortgage interest deduction to loans up to $750,000 instead of $1 million. The rate lowering part reduced marginal tax rates across most brackets - the top rate dropped from 39.6% to 37%, and most other brackets saw reductions too. So while middle-class families generally came out ahead due to the higher standard deduction and lower rates, some higher-income taxpayers actually saw their taxes increase because they lost valuable deductions despite the rate cuts. It was definitely a complex rebalancing act, not just a simple across-the-board tax cut.

That's a really insightful point about the charitable giving impact! I hadn't thought about how removing the tax incentive would affect donation behavior. Do you know if there have been any recent changes to address this? I remember hearing something about being able to deduct charitable donations even if you take the standard deduction during COVID, but I'm not sure if that's still a thing or if they made it permanent. The weekend receipt organizing struggle is so real - I used to have shoeboxes full of papers that I'd sort through every January. Now tax prep is so much simpler, though like you said, I still keep track of the big stuff just in case.

You're right about the temporary COVID provision! During 2020 and 2021, there was an "above-the-line" charitable deduction that let people who took the standard deduction still deduct up to $300 ($600 for married couples) in charitable donations. Unfortunately, that expired after 2021 and hasn't been renewed. There have been various proposals in Congress to make some version of this permanent or to restore stronger charitable incentives, but nothing has passed yet. It's one of those unintended consequences of tax reform that policymakers are still trying to figure out how to address. The irony is that the doubled standard deduction was supposed to simplify things and help middle-class families, but it ended up reducing charitable giving from the exact demographic that many nonprofits depend on. It's a good example of how tax policy changes can have ripple effects that go way beyond just what people pay in taxes.

This international perspective is really eye-opening! I had no idea the U.S. approach was so different from other countries. The 8 hours per year savings stat is incredible when you think about it - that's like getting back a full work day just from not having to organize receipts and fill out itemization schedules. Your point about shifting from targeted to universal tax relief is really interesting. It makes me wonder if this was intentional policy design or more of an unintended consequence. Like, did they deliberately want to move away from encouraging specific behaviors (like homebuying and charitable giving) toward just giving everyone a bigger tax-free amount? Or was it more about simplification and these other effects just happened as a side effect? Also curious about your research - have you seen data on whether this change actually improved tax compliance overall? I imagine fewer people make mistakes when they're just taking the standard deduction versus trying to calculate all their itemized expenses correctly.