Federal Tax, Tax

Dependents and Federal Income Taxes

How do dependents affect federal income taxes? The Congressional Budget Office recently issued a report on this topic. It analyzed tax return data under 2019 tax rules and compared it with the rules that are scheduled to be in place for 2026. It estimated that the average tax benefit per dependent for 2019 is $2,300 ($3,800 per family). Under the 2026 tax rules, that benefit will be $1,700 per dependent ($2,800 per family), on average. Under current rules put in place by the Tax Cuts and Jobs Act, the tax benefit of children younger than 17 is generally greater than the tax benefit of older children or other relatives. Those rules are set to expire after 2025. Contact Cg for more information. © 2020

“How Dependents Affect Federal Income Taxes.” Congressional Budget Office, January 23, 2020. https://www.cbo.gov/publication/56004.