Question

For Tax Year 2019, amounts are indexed using the Chained Consumer Price Index for All Urban Consumers ("chained CPI"). What impact will this have on 2019 tax returns?

a. Taxpayers will end up paying more tax on 2019 tax returns.
b. Taxpayers will not pay any tax on 2019 tax returns.
c. Using the chained CPI, taxpayers will pay less tax on 2019 tax returns.
d. Using the chained CPI will not have a notable impact on 2019 tax returns.

Answer 1

d. Using the chained CPI will not have a notable impact on 2019 tax returns.

Step-by-step explanation:

when amounts are indexed using the chanined consumer price index, they increase slowly because there is a period to period connection in the consumer price index.

Therefore, The use of the chained consumer price index would have not have any significant impact on 2019 tax returns.