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Fishes: How did the new tax law impact you this year?

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Effective rate dropped from 18% to 15.5%. SALT limitation lowered deductions significantly but had my third kid in 2018, so the $2k/kid tax credit and lower rates made up for that. My itemized deductions were $35k in 2017 but took the standard deduction of $24k in 2018 due to SALT limitation.

Chill out with the political aspects and look at numbers objectively. Lets assume local govt had 2% property tax in both state A and B. Nice home in one (e.g. Georgia) costs 500k so you pay 10k local property tax and a 1bd in another (NY / CA) costs 1M and the other person pays 20k in property tax. It's clear that by capping the deduction to a total dollar (not percentage or other methods) the new federal tax code covers the local taxes in State A and leaves the ppl in State B with10k leftover to pay taxes for in that example. It's clearly biased and your argument above that everyone is now paying equally and it's up to local government is objectively wrong because the issue isn't about higher local tax rates but rather lower deduction cap which affects those in places with higher cost of living not necessarily higher local taxes. Skip the politics, look objectively.

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Flawed argument as property taxes are not the same in each state... Many high value zones also have high property taxes. NY, NJ, IL, CT. Your hypothetical situation is not objective. It is political spin that sounds objective but sheds a positive light on your perceived view. Don’t be fooled by the banter. Federal government shouldn’t be subsidizing unlimited state tax. It incentivizes states to keep spending more and keep raising taxes. They need their own accountability .

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Rip off for home owners

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Congress makes tax law. It passed both House (then Republican-controlled) and Senate (still is) then was signed by the president. The president can urge Congress to make laws but the executive branch can’t itself.

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Well let's just say I wish my divorce had been finalized in 2018

likefunny

Took home extra $14k. Which is good, because at $500k HHI, we were struggling, and needed more in long term investment vehicles. And our grandkids will be more than capable to pay down the addtl national debt

likefunnyuplifting

Pretty sure this was sarcastic

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Less taxes paid on my end

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So those who make more benefit while some of us who make little get screwed. Seems about right.

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BCG2 yeah! And free health care and education but only for us states that that have high tax! That’s how that goes right?

Net very little difference. Weekly more $ but ended up with $2k tax bill vs $5k tax refund

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Higher income but less tax than last year. Very happy with new child deductions!

Owed a ton of extra federal from a high tax state since I couldn’t deduct SALT. That sucked. Well designed plan to soak the coasts

likeupliftinghelpful

This narrative is inherently false- the coasts PAY more to the federal government than the rest of the country.

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No deduction for SALT is a killer. Haven’t filed yet but it’s going to be brutal...

likeuplifting

BCG5, nobody is saying low tax states are funding the high tax states. The point is that it is not a dollars in dollars out game. The point of taxes is you are taxed to support the common goals of the people in the place collecting tax. State tax goes to state budget. Federal tax goes to federal budget. Everyone across the country has the same federal tax structure. Uncapped SALT changes that structure by letting states with high taxes get a better break than those with low taxes. That is inequitable. I have seen the house price argument floating around and it’s the only reasonable one I have heard. However states like NY and NJ not only have high home prices they also have stupid high property tax rates. The argument is not that low tax states subsidize high tax states. It is that the federal government subsidizes high tax states. If you think this is okay then would you also be happy if universal health care only covered high state taxes? Or maybe give them better benefits? That’s what this special uncapped SALT represents. A bigger drink from the federal well. And it discourages controlled budget at a state and local level. Now the spotlight is on and people will leave if they feel they are getting a bad deal in their states.

likehelpful

A lot of limousine liberals here (including myself), reap benefits of Trump’s tax cut but still complain about his other conservative policies. Cognitive dissonance is real.

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Yeah...you’re so completely wrong it’s hard to know where to start. The net drain from blue states to red states is quite real. Blue states typically have bigger populations, and much higher numbers of high earners, and pay far more taxes into the Federal coffers than red states. Red states have fewer people, but tax those people less, and then can’t support their high percentage of poor people on those local $$, so they get a much bigger share of Federal dollars than their actual population numbers would suggest. And yet somehow they still have crappy schools, crappy health care, and a lower standard of living than people in blue states. Maybe that’s because they don’t really understand that schools & health care are local issues and need to be funded with local dollars (you know, taxes...).

likehelpfulfunny

Went from paying 26% to 18% on $350K. We clearly benefited from not having to deal with AMT. Went from owing to $20K to owning $7K.

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That tracks. 18.0% for me+wife with 310k. High COL state but forced to take standard deduction for the first time

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Weird people in liberal states owed more because they had to pay the same federal taxes as everyone else, maybe you should talk to your local liberal politicians and ask them not to tax the fuck out of you anymore? The fact is, the previous state tax deductions allowed for over taxed states to take a larger and larger portion of the tax base from the federal government and use it for their own. Under the new law, the states will be forced to actually provide value for their tax income or people will leave Also there’s a big difference between taxes paid and the amount of returns which a lot of liberals seem to be unable to put together despite getting paid to understand strategy based on numbers.

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Thank you senior manager 2. I strongly agree. This was about targeting the higher cost of living blue states for political attack reasons. The cap on SALT and on mortgage deductions could have been cost of living indexed if the real purpose was to cut waste / discourage overbuilding of homes. I probably would have been for that. But by making them fixed numbers it is very clear - this was a hack job - and any reasonable smart person should hate it. Signed, Not a Democrat, just a person capable of doing math.

likehelpfulfunny

Ditto

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We paid an additional 7k. :/

likeupliftinghelpful

But did you make additional 70k?

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Interesting comments. I am amazed that we are supposed to be a bright group and probably many CPA's. It's a wonder that we cant use normalized information as a comparison to evaluate benefit or not. It's not about the refund or lack there of, it's about the amount owed, liability, as calculated on your return. Refund or have to pay in is a reflection on how you managed your pre payment to the debt. Several brought this up yet it doesnt seem to sink in. Honestly this educated group needs to do better.

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53% in total taxes owed, not looking at refund amount. I adjusted withholding by +800 a paycheck for the 4th quarter to keep from owing money

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Paid less. Live in TX. All my state/local/real estate taxes combined is around $10K . Normally wouldn’t qualify for standard deduction but with doubling it is extra money in the pocket.

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Got a much smaller fed return

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It’s likely you are paying a smaller effective tax rate. Some people payed more due to changes in the SALT deduction. We’re finally moving in the direction of tax reform. I hope that more deductions are eliminated in an effort to simplify the tax structure. A flat tax would be ideal

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Went from 1k refund to owing 6k, despite reducing exemptions from 6 to 1 when the plan was enacted - Homeowner in NJ

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How did you go from 6 to 1? Did you get divorced and end up losing custody of the kids? Sorry Im really curious not trying to probe.

Owes 6k TY vs refund 2k LY

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Exactly. People should be looking at Line 15 on their 1040s and comparing to last year

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WA here - no state tax. Effective tax rate went from 17% of 150k gross to 10% in 2018.

likeuplifting

Why is almost everyone equating tax refunds with the actual tax? You should just all give your effective tax rate prior and after

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M5, exactly!

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