Today, the Treasury Department released the new 1040 form that families and individuals will use when filing their taxes next spring. This updated, simpler form reflects the pro-growth changes Republicans made to our tax code last year.
Three main factors contribute to the simplification that will allow taxpayers to save time, money, and a whole lot of stress when they file their taxes in the future:
1. Nearly Doubled Standard Deduction
Under the old, broken tax code, 48.8 million taxpayers itemized their deductions.
According to the nonpartisan Congressional Budget Office (CBO), next year 31.1 million hardworking taxpayers will no longer be burdened by the complexities of itemizing, instead choosing to take the standard deduction and filing on this simple postcard system.
That is a 64% decrease in the number of itemizers. This is welcome news for many hardworking taxpayers who for too long were bogged down by the compliance burden of the old tax code.
2. Minimized AMT
The Alternative Minimum Tax (AMT) is all but eliminated under our new tax code. This onerous tax forced millions of taxpayers to calculate their taxes twice in one year and pay the higher amount, causing headaches and frustrations for so many of our families and workers.
As CBO reported, 4.8 million Americans will no longer be hit by the AMT. In 2017, 5 million taxpayers were hit by the AMT. Now, in 2018 CBO estimates that only 222,000 will be subject to it.
That is a 96% reduction in the number of Americans hit by the AMT.
3. New, Simpler Filing System
This new postcard style filing system is going to lead to a less chaotic tax season for the majority of taxpayers.
In addition to simplifying the form to only include the most commonly used lines, all personal information is now found on the first page—compared to the old 1040 form where questions regarding personal information were located at various places throughout the form.
Many taxpayers use software and file their taxes electronically, meaning they won’t handle a paper version of this new postcard style form. For electronic filers, this new form streamlines the way the software will work and simplifies the way they will input their tax information.
This postcard style filing system is just one of many promises Speaker of the House Paul Ryan (R-WI) laid out in his “Better Way” blueprint that House Ways and Means Chairman Kevin Brady (R-TX) and House Republicans have been able to deliver this Congress.
Ways and Means Republicans are committed to building off this success by continuing to work to make our tax code even more fair and simple.