IRS Data: Trump Tax Cuts Benefited Indiana Middle Class Taxpayers

Congressional Democrats and President Joe Biden falsely claim that the Trump tax cuts, also known as the “Tax Cuts and Jobs Act,” was a giveaway for “the rich” and large corporations that did little or nothing to help middle class.

This is not true. In Indiana and across the country, the TCJA has provided significant tax relief for middle income families, according to an analysis of official IRS Statistics of Income data performed by ATR. The analysis compares 2017 data with 2019 data, the most recent year available:

INDIANA 

24.7% tax cut for Hoosiers making between $25k – $50k. Indiana households with adjusted gross income between $25,000 and $50,000 saw their average federal income tax liability drop from $2,275.81 in 2017 to $1.824.61 in 2019, a 24.7% reduction in federal income tax liability. 

23.5% tax cut for Hoosiers making between $50k – $75k. Indiana households with adjusted gross income between $50,000 and $75,000 saw their average federal income tax liability drop from $5,364.01 in 2017 to $4,342.34 in 2019, a 23.5% reduction in federal income tax liability. 

22.4% tax cut for Hoosiers making between $75k – $100k. Indiana households with adjusted gross income between $75,000 and $100,000 saw their average federal income tax liability drop from $8,597.87 in 2017 to $7,018.70 in 2019, a 22.4% reduction in federal income tax liability. 

The TCJA also contained numerous reforms that benefited Indiana households: 

IN households no longer stuck paying the Obamacare mandate tax. The TCJA zeroed out the Obamacare individual mandate tax penalty effective 2019. In 2017, 106,960 Indiana households paid the Obamacare individual mandate tax penalty. 20,940 (92%) taxpayers earned less than $75,000. 82,850 households paid the Obamacare individual mandate tax penalty in 2018. 74,700 (90%) of taxpayers earned less than $75,000. 

Doubled Standard Deduction. The TCJA doubled the standard deduction from $12,000 to $24,000 for taxpayers filing jointly and $6,000 to $12,000 for single filers. 2,925,250 IN households took the standard deduction in 2018 including 2,866,830 households earning less than $200,000. 2,991,030 taxpayers took the standard deduction in 2019 including 2,927,440 taxpayers earning less than $200,000. 

20% tax deduction for IN small businesses. The TCJA created a new, 20% deduction for small businesses organized as passthrough entities (LLCs, sole proprietors, S-corporations, partnerships). 401,460 IN taxpayers claimed the small business deduction in 2019 including 340,350 taxpayers earning less than $200,000. 343,310 taxpayers claimed the small business deduction in 2018 including 292,250 taxpayers earning less than $200,000. 

Doubled Child Tax Credit. The TCJA doubled the child tax credit from $1,000 to $2,000. 820,450 IN households took the child tax credit in 2019 including 775,710 households earning less than $200,000. 815,420 households took the child tax credit in 2018 including 773,230 households earning less than $200,000. 

Employers of all sizes also responded to the tax cuts by hiring, expanding, raising pay and increasing employee benefits. These gains will be threatened if Democrats succeed in repealing the TCJA.