Will Your Taxes Go Up? Find Out With These 8 Scenarios
Posted by Tyler Durden on December 13, 2017 10:10 pm
Tags: Finance, Home mortgage interest deduction, Income tax, Income tax in the United States, Income taxes, MONEY, Nancy Pelosi, new york city, OBAMACARE, Private Jet, Property tax, republican party, Senate, Social Issues, State income tax, tax, Tax Cuts and Jobs Act, white house
Categories: Economy Finance Home mortgage interest deduction Income tax Income tax in the United States Income taxes money Nancy Pelosi new york city obamacare Private Jet Property tax republican party Senate Social Issues State income tax tax Tax Cuts and Jobs Act white house
With Republicans having inexplicably sacrificed a crucial Senate seat last night by choosing to support a candidate accused of multiple counts of pedophilia, it’s unclear whether tax reform is even a remote possibility at this point. Certainly, the challenge of forming a consensus among the GOP was difficult enough when they held a 2-seat advantage in the Senate so we can only assume it will be next to impossible now that that lead has been cut in half.
Of course, Republicans seem to have every intent of passing a tax bill before Doug Jones gets seated in January…but, then again, they’ve missed almost every deadline they’ve set for themselves since Trump moved into the White House nearly a full year ago.
Be that as it may, just in case a bill gets passed at some point before winter break, Bloomberg, along with a little help from Baird Private Wealth Management, has put together a series of 8 tables which help to quantify exactly how you may be impacted by tax reform whether you’re a “millionaire, billionaire, private jet owner” living in Manhattan or an “average Joe” making $40k a year and renting an apartment in Milwaukee. Here they are:
Scenario 1 – Manhattan Millionaires: These Manhattan residents have a jumbo mortgage (at an assumed 4 percent interest rate) and take a $40,000 deduction on mortgage interest; pay property taxes of $96,250 and state income tax of $135,360; and make annual charitable contributions totaling $100,000.
Unfortunately, contrary to what you might hear from Nancy Pelosi, these folks take a hit under both the House and Senate tax bill primarily due to the loss of the SALT deductions.
Scenario 2 – Malibu Millionaires: A married couple has a primary residence in Malibu, California, and a second home in Lake Tahoe. The property tax on the Malibu home is $15,860, and $4,896 on their second home; they deduct $40,000 total in mortgage interest for the two homes; and give $50,000 to charity.
Scenario 3 – Small Business Owner: This married couple with a small manufacturing business in Pittsburgh, Pennsylvania, has $300,000 in pass-through business income. Their deductible mortgage interest adds up to $6,000; their property tax is $8,600; and they give 5 percent of their income to charity.
Scenario 4 – Suburban Family: A married couple in a New York City suburb has estimated state income tax of $17,290; their annual mortgage interest deduction is $14,000; and they pay property tax of $13,750 — about the same amount they donate to charity.
Scenario 5 – Single Secretary In Manhattan: This New York City renter pays estimated state income tax of $8,148 and gives about $6,500 to charity.
Scenario 6 – Married Family In Austin: This young couple rents and has income of $100,000. They give $5,000 a year to charity.
Scenario 7 – Median Income Couple In Portland: This Portland, Oregon, couple earns close to the median household income for the U.S. Their property tax bill is $1,688; their deductible mortgage interest is $3,000; and estimated state income tax is $4,744.
Scenario 8 – Median Income Family In Milwaukee: This married couple rents and has an estimated 2017 state income tax bill of $2,104.
Of course, this will all change when/if the GOP submits a final tax bill for consideration…but, like Obamacare, you may only find out how it truly impacts you after it has already been passed.