Congress looking at making it $20,000 instead of the $10,000 it was capped at under Trump:

A Trump-era tax law could get an overhaul. Millions could get a bigger tax refund this year as a result.

I never understood "hard numbers" in a percentage based progressive tax code.

But then you realize they have to "legislate" to revise those "hard numbers"...

Oh, the blue state subsidy. Keep it at $10K.

A Trump-era tax law could get an overhaul. Millions could get a bigger tax refund this year next year as a result.

The 'News Media'...Great reporting there!

quote:

Originally posted by ArtieS:
Oh, the blue state subsidy. Keep it at $10K.

Yeah.... it really does encourage higher local property taxes. This also means people who live in lower tax areas pay effectively more of the federal tax burden.

At stake is the so-called state and local tax deduction, or the SALT deduction, which was limited to $10,000 in Trump's signature tax law. But a new proposal would lift the cap to $20,000 for married couples, with the change retroactive for the 2023 tax year.

If it moves forward, the proposal could deliver bigger 2024 tax refunds to millions of married taxpayers.

Prior to the SALT deduction cap, taxpayers could deduct all their state and local taxes from their federal taxes, a tactic that some policymakers have criticized as mainly benefiting wealthy homeowners in states with high taxes, such as New York and California. But some lawmakers also point out that the $10,000 cap is increasingly impacting middle-class homeowners who live in regions where property taxes are rising.

On top of that, the $10,000 cap is also viewed as a marriage penalty by some, given that the dollar limit applies to both single taxpayers and married filers alike. Most tax provisions, such as the standard deduction and tax brackets, are higher for married couples filing jointly, given that their tax returns reflect earnings for two people.

Does the cap apply to State income tax or just property tax?

$20,000 would be better even in Florida. Not all of us can throw a couple cows on our property and qualify for ag tax breaks. We pay sales tax down here as well.

quote:

Originally posted by Fenris:
Does the cap apply to State income tax or just property tax?

It applies to Schedule A lines 5a, 5b and 5c. These are state and local income taxes -or- general sales taxes (5a), state and local real estate taxes (5b), and state and local personal property taxes (5c). Line 5d is the sum of lines 5a, 5b and 5c. Line 5e is the smaller of line 5d or $10,000 (MFJ).

If you are on the fence as to which way to go (itemized deduction vs. standard deduction), it might be wise to wait and see where this legislation goes (per my enrolled agent old high school buddy).

Link to the IRS website and a .pdf version of Schedule A. Look on the left side by "Taxes You Paid".

The increase to $20,000 would apply to the 2023 tax year with those refunds issued in 2024. It's only for one year.

"The tweak would apply to joint returns for couples with adjusted gross income below $500,000 in 2023, which would cover all but the nation's top-earning married couples.

After 2023, the SALT cap would revert back to $10,000 per filer, regardless of filing status, until the end of 2025, when the deduction limit will expire, along with many other provisions from the Tax Cuts and Jobs Act".

If you want to see some real wailing and gnashing of teeth, just wait until the TCJA provisions sunset.

This message has been edited. Last edited by: 229DAK,

quote:

If you want to see some real wailing and gnashing of teeth, just wait until the TCJA provisions sunset.

The changes that Biden wanted to make in capital gains taxes—eliminating the step-up in basis on death; eliminating 1031 exchanges—would have been devastating to real estate investors. Ending the current estate tax exemption level would have folks scrambling to estate planning attorneys to set up AB trusts again.

Lots of bad things are bound to happen as the Feds look for every possible way of milking the middle-class taxpayer.

Good! We're getting murdered by property taxes and state income taxes. Inflation in real estate valuations has ballooned property taxes for many.

If you think "The RICH" shouldn't get the same deductions as everybody else, remember that the definition of "Rich" can be changed.

Inflation is a really handy tool for the government to grab ever more of our wealth. We pay tax on capital gains that are in large part just inflation. Wages go up with inflation, and so then do the taxes.

We should rejoice any time a tax is reduced.

quote:

Originally posted by Fly-Sig:


Good! We're getting murdered by property taxes and state income taxes.

So the rest of us get to subsidize you because your STATE has screwed you? SMDH

quote:

Originally posted by PASig:

quote:

Originally posted by Fly-Sig:


Good! We're getting murdered by property taxes and state income taxes.

So the rest of us get to subsidize you because your STATE has screwed you? SMDH

Well then remove all the deduction not just the first 10k. I, too, am subsidizing every person who takes a SALT deduction. I am so lucky I get to do it at a higher % tax rate because of where I live.

Really it is another form of "tax the rich bastards".

Thanks 229DAK, so this appears to be a election year headline for Biden, akin to cancelling student debt for college borrowers (which he keeps slipping in BTW).

Certainly not a tax expert but I have a few points I think about. High tax states getting subsidized is certainly a thing. That being said. Not being able to deduct taxes you pay locally seems to start sounding like double taxation if you can’t deduct it. In general your money ideally is taxed once (not counting sales tax) in my idea of “correct”. The other point is what fly Sig is referring to. If you have a problem with SALT I can only assume you gave an issue with all the other deductions too. You certainly are subsidizing those people under this argument as well.

Which is yet another bunch of reasons we need a flat tax. For everyone. With few if any restrictions. Fair tax I think some call it. A boy can dream.

It's not complicated to me. The Feds tax you, then the state /locals tax you. Expecting the Feds to bail you out at others expense is the unfair part. You should be bitchin' about the state expenses. let the state cap it or refund it.

quote:

Originally posted by preten2b:
It's not complicated to me. The Feds tax you, then the state /locals tax you. Expecting the Feds to bail you out at others expense is the unfair part. You should be bitchin' about the state expenses. let the state cap it or refund it.

quote:

Originally posted by preten2b:
It's not complicated to me. The Feds tax you, then the state /locals tax you. Expecting the Feds to bail you out at others expense is the unfair part. You should be bitchin' about the state expenses. let the state cap it or refund it.

Are you saying you're ok with the $10k SALT deduction but not the $20k? Or you oppose any SALT deduction at all?

Philosophically, I like the lowest possible tax rates without all the brackets and limits and phase-outs.

Until someone hits some of those phase-outs you don't realize how big the impact is. For many middle class people this realization hits in what should be their best income years, perhaps after the kids leave the home. Parents struggle to earn and provide, but they get a lot of tax breaks. Whether it be child care tax credits, home mortgage deduction, state tax deductions, education deductions, etc.

Then you get to where you have "spare" income to now try to get a meaningful retirement nest egg. And your taxes go waay up in all kinds of ways.

Then you get to retirement, and get further slammed by taxes. Sell your house? Pay capital gains, and get your Social Security taxed heavily, and IRMA will cost you a butt load in two years. And much of the gains you have are inflation not true increases in purchasing power, so you're getting taxed into a lower standard of living.

SALT should be either 100% deductible or 0% deductible. Anything else is just progressivism, hate the rich.

Simplistic answer was only trying to say OP was about a change in tax code, which looked like another vote buying scheme, and that was why I wouldn't agree with the change either.

Yes, tax law should fit on a single postcard. There are many disparities there. However if one is able and chooses to work and buy in an expensive market where jobs usually pay better or school districts and police are better, (location-location-location) ect, then I see it as a local market force to me, not a federal tax subsidy which we all share.

quote:

Originally posted by preten2b:
Simplistic answer was only trying to say OP was about a change in tax code, which looked like another vote buying scheme, and that was why I wouldn't agree with the change either.

Yes, tax law should fit on a single postcard. There are many disparities there. However if one is able and chooses to work and buy in an expensive market where jobs usually pay better or school districts and police are better, (location-location-location) ect, then I see it as a local market force to me, not a federal tax subsidy which we all share.

What's good about $10k but bad about $20k? Especially since the $10k has been for single or married? Married folks easily can pay twice the SALT compared to singles.

Why not make the deduction $3k, or $300k?

[/QUOTE]

What's good about $10k but bad about $20k? Especially since the $10k has been for single or married? Married folks easily can pay twice the SALT compared to singles.

Why not make the deduction $3k, or $300k?[/QUOTE]

I'm not trying to justify why tax code gives exceptions. Just the attempt to change it again. Why do they give child credits? the US wanted families. Why do you get any mortgage deductions at all? They wanted to encourage home ownership. They could all be argued as good ideas, or unnecessary complications of IRS code.

Only distinction for me was it changing again, to aid in blue states for their spending problems and over-regulation and the taxation to pay for it. Average income is often way higher in DC, Chicago, LA, San Fran, or NYC. We all know you'll likely make more in the big city, and also have to pay more for homes nearby. I'll deliberately exaggerate, if private school or day care costs twice as much in DC, you don't get twice the child credit. You also don't get twice the standard deduction. However you might get twice the salary of someone living in the sticks.