The Lincoln Times

New Income
Tax
Law
Means
Savings to
Men
With
Families

Washington—The new income tax law will bring relief (in 1946) mainly to men and women who support sizeable families on small or moderate incomes.

All of the estimated 12 million persons who will move out of the tax-paying class next year are married or have dependents. They will escape taxation because the new law gives exemptions from both normal tax and surtax of $500 for the taxpayer, his spouse and his dependents. Under the old law, these exemptions were allowed only for surtax.

While the exemptions hardly can be described as a "bonus for babies," they will be of considerable help to millions of people at a time of high living costs. For example, a man with wife and five dependent children and an income of $2,000 pays $53 tax this year. Next year he will pay no tax on a $2,500 income.

Besides the exemptions, the tax rate applied to each surtax bracket is reduced by 3 percentage points. Also the combined normal tax and surtax, as computed under the new exemptions and rates, is further reduced by 5 per cent of the tax.

A tax cut of $40, or even $20, means a substantial saving to many low-income taxpayers. Take a man with a wife and three dependent children and an income of $3,000. This year his tax is $111, or $9.25 a month. In 1946 his tax will be $42, or $3.50 a month.

Wage earners will get their first closeup of reduced taxes in smaller withholdings from paychecks received on and after January 1. For a married man, with two dependent children and a weekly wage of $45, the withholding will be 50 cents, as compared with $1.40 from the same wage during 1945. If his wage is $40, there will be no withholding in 1946. In 1945 the withholding has been 80 cents a week.

Tax returns for 1945 must be filed by next March 15 as usual, even if the 1945 taxpayer isn't paying any tax in 1946. Many persons who worked only a few months this year but had taxes withheld from their wages will get refunds. Every civilian whose income in 1945 was $500 or more must file a return.

Taxpayer, Wife and No Dependents
Income $2,000 2,500 3,000 3,500 4,000 4,500

Taxpayer, Wife and Two Dependents

Taxpayer, Wife and Three Dependents
Income 1946 Tax 1945 Tax
$2,000 No Tax $39
2,500 No Tax 53
3,000 $42 111
3,500 128 215
4,000 205 318
4,500 299 422

Taxpayer, Wife and Four Dependents

Taxpayer, Wife and Five Dependents

1946 Tax	1945 Tax
$154	$202
240	305
327	411
416	518
510	631
604	743

Income	1946 Tax	1945 Tax
$2,000	No Tax	$39
2,500	$50	105
3,000	137	211
3,500	223	315
4,000	308	418
4,500	395	523

Income	1946 Tax	1945 Tax
$2,000	No Tax	$39
2,500	No Tax	53
3,000	No Tax	67
3,500	$33	115
4,000	118	218
4,500	204	322

income	1946 Tax	1945 Tax
$2,000	No Tax	$ 39
2,500	No Tax	53
3,000	No Tax	67
3,500	No Tax	80
4,000	$ 23	118
4,500	109	222