Under the 2018 Tax Law, Inflation Will no Longer Rise at the Rate of Inflation

The 2018 tax law changes the way the IRS calculates inflation.

We promise we’ll keep this from getting complicated.

The way most economists calculate inflation is through the Consumer Prince Index for urban consumers (the CPI-U), which tracks the prices of goods and services that most people use.

The 2018 tax law has the IRS using the “Chained Consumer Price Index.”  Basically that’s the same thing, except that it assumes that if something gets too expensive, consumers will switch to a cheaper alternative.

So inflation under the new way the IRS tracks it (the “Chained CPI”) will increase more slowly than the way they were tracking it before.

Which is more accurate?  Honestly we don’t want to argue about it.  What we want to do is figure out what this will do to your taxes, and how you can use it to save the most money.

Let’s do that.  Contact Tax Ninja for a consultation.