Donald Trump has promised huge tax cuts for everyone. TPC’s analysis of his tax plan found that, on average, households throughout the income distribution would see their tax bills go down. But some taxpayers, especially singles, would pay more in taxes than they do today or under Hillary Clinton’s tax plan.
My Tax Policy Center colleague Len Burman showed in a recent TaxVox post that Trump’s plan would levy higher taxes on some single taxpayers. Another TPC colleague, Lily Batchelder, demonstrated in a TPC paper that Trump’s plan would raise taxes on millions of families.
Three major changes make Trump’s plan particularly hard on single parents.
First, he would eliminate the head-of-household filing status, thus requiring single parents to file as individuals. By itself, that boosts tax rates for single parents at most income ranges.
Second, although Trump would boost the standard deduction, he would eliminate personal and dependent exemptions, raising taxable income for all single parents who do not itemize. Under current law in 2017, a single parent with one child can take a $9,400 standard deduction and two $4,100 exemptions, thus reducing her taxable income by $17,600. Trump would replace that combination with a $15,150 standard deduction, making $2,450 more income subject to tax. And bigger families would get hit even harder—their taxable income under Trump’s plan would go up by $4,100 for each additional child, relative to current law.
Finally—and most consequentially—Trump would collapse the current tax schedule from seven rates to three. That may seem less complicated but it would actually raise rates at some income levels. The result: Higher taxes for many heads of household. For example, in 2017 a single parent with one child who claims the standard deduction would face a 25 percent tax rate on adjusted gross income (AGI) between $53,050 and $68,550, compared with just a 15 percent rate under current law.
Trump’s tax rates would increase a single parent’s tax bill at almost every AGI level between $15,150 and about $560,000 (see chart). If her AGI is $15,150 or less, she would owe no tax under either Trump’s plan or current law. And if her AGI exceeds roughly $560,000, she’d pay less than under current law since Trump’s 33 percent top tax rate is so much lower than the current 39.6 percent top rate. And very high-income single parents would save a huge amount from Trump’s tax cuts. The top 0.1% would see an average tax cut of more than $1.3 million, boosting their after-tax income by almost 16 percent relative to current law (see page 6 of pdf of TPC’s distributional effects of Trump’s tax plan).
Because Trump would eliminate the dependent exemptions, taxes would be even higher for a single parent with more than one child. On the other hand, these tax increases would be at least partially offset for families with children under age 13 by Trump’s proposed above-the-line deduction for childcare costs. For example, a taxpayer with $100,000 of AGI who spends $5,000 on childcare would get a $1,250 tax break, offsetting most of the roughly $1,450 tax increase caused by Trump’s rate changes. Trump would also repeal the Affordable Care Act’s net investment income tax and the alternative minimum tax, both of which hit high-income single parents hard.
Regardless of other provisions, however, most single parents could look forward to higher taxes under Donald Trump’s tax plan.