Income Taxation of Individuals
The individual tax model differs significantly from the corporate tax model due to the intermediate income concept of adjusted gross income. A number of unique features are also applicable to the determination of an individual's gross tax liability. These include the taxpayer's filing status, personal and dependency exemptions, the standard deduction, deductions for adjusted gross income, and deductions from adjusted gross income. Because many of the taxpayer's deductions are for personal expenses, the deductions may be limited to amounts that exceed specific minimums. Other deductions cannot exceed certain maximums.
Higher-income taxpayers face increases in their effective tax rates due to the income limitations affecting certain other deductions and credits. Examples include the income phaseout rules that reduce or eliminate the deduction for student loan interest and reduce or eliminate the child tax credit and the credits for undergraduate and graduate education.
A taxpayer's filing status determines the allowable standard deduction and the tax rate schedule ...