Mother Hubbard’s Crying the Tax-Kickin’ Blues: How the TCJA Hurts Your Big Family

Updated: Jun 19, 2020

When Congress reformed taxes in 2017, a stated goal was to reduce taxes for families. Did it? In many cases, especially for big families, it did not. Do you have a big family? If so, you probably noticed that the tax reform bill of 2017 didn’t help you. Here’s what happened.

What is Adjusted Gross Income (AGI)?

When you do your income taxes each year, you add up the money you made in that previous year – technically called your “Adjusted Gross Income” or AGI – and you have to pay income taxes on that money. You get to subtract a few things from the AGI that let you pay less tax.

The Personal Exemption (Gone But Not Forgotten)

One of the things we’ve gotten to subtract from our AGIs (since 1913!) was a dollar amount called a personal exemption. The personal exemption is an amount you get to subtract for each member of your household. The amount of the exemption was huge relative to income back in 1913 and let a lot of people off the hook from paying any taxes. The exemption amount decreased to help generate money to pay for World War II in the 1940s but has stayed reasonably steady since then. Until 2017.

The new tax law that was adopted at the end of 2017, the Tax Cuts and Jobs Act (TCJA), changed a few things, including the removal of the personal exemption. In other words, the TCJA won’t let you subtract from your income about $4,000 per person in your household. That means that if you have a lot of kids, you are proba