HIP, HIP, HOORAY

[Merge]

I've being playing with the math as the details come out.

One thing I am unsure about on the plans. Are health premiums, HSA contributions and 401(k) treated the same as current law?

Assuming those are treated the same. House plan is basically a wash for me. Senate plan would lower my tax bill a bit.

 

[silkcitypirate]

I've being playing with the math as the details come out.

One thing I am unsure about on the plans. Are health premiums, HSA contributions and 401(k) treated the same as current law?

Assuming those are treated the same. House plan is basically a wash for me. Senate plan would lower my tax bill a bit.

Can anybody tell me if student loans will still be a write off?

 

[Merge]

Can anybody tell me if student loans will still be a write off?

Interest deduction on loans? That will be gone.

Impact to you depends on your circumstances though.

 

[shu09]

Can anybody tell me if student loans will still be a write off?

The student loan interest deduction is repealed in the House version of the bill. The Senate version keeps it in place. This will have to be hashed out in conference committee.

 

[shu09]

Took a look at my 2016 numbers. I come out ahead by a decent amount. More under the Senate plan, a bit less under the House plan. Good by me either way!

 

[Pirata]

I read some about treating 401K contributions above $2500 ike a
Roth.

Tax it now and then withdrawals are not taxed.

 

[Merge]

I read some about treating 401K contributions above $2500 ike a
Roth.

Tax it now and then withdrawals are not taxed.

I believe that was removed from the senate bill, but they may not allow pretax catch-up contributions anymore?

 

[Pirate64]

I am screwed. 14k in real estate taxes, 26k in medical expenses. That's 30k less in deductibles. No kids.
I calculated I will pay 6-7K more in taxes a year based on the House bill .

 

[cernjSHU]

I am screwed. 14k in real estate taxes, 26k in medical expenses. That's 30k less in deductibles. No kids.
I calculated I will pay 6-7K more in taxes a year based on the House bill .

Wow. That’s brutal. Talk about wealth distribution! More money to the weathy and more money from the coastal states like N.J., NY and California to the Midwest and south States.

 

[Pirata]

I am screwed. 14k in real estate taxes, 26k in medical expenses. That's 30k less in deductibles. No kids.
I calculated I will pay 6-7K more in taxes a year based on the House bill .

Did you also run it through the brackets and the rates? You can't just consider the reduction in the deductible.

 

[Pirate64]

Did you also run it through the brackets and the rates? You can't just consider the reduction in the deductible.

I used an on line calculator. 25% bracket.

 

[Merge]

I used an on line calculator. 25% bracket.

Hard to say with all of the moving parts and without knowing your specifics. but the senate bill keeps deductions for medical expenses but does remove the state tax deduction.

You would definitely be seeing an increase based on the proposals out there so far unfortunately.

 

[Pirate64]

Hard to say with all of the moving parts and without knowing your specifics. but the senate bill keeps deductions for medical expenses but does remove the state tax deduction.

You would definitely be seeing an increase based on the proposals out there so far unfortunately.

Tx. I know the Senate bill. Watching and recipherin' every day. You work your butt off since graduation and then 53 years later the damn inefficient government -at all levels- screws you for having modest success.
Happy Thanksgiving Merge.

 

[Pirata]

The 25% is only part of it.

You have to run your taxable income through the bracket calculation.

For a given taxable income even though you're in the same 25% bracket you would pay less under the proposed plans than the current plan.

under the house plan, the first 90k is taxed at 12%, 25% for the income over 90k.

Current plan is 10% on the first 19k, then 15 on the next 58k, then 25%

 

[Merge]

I think 6k was probably a bit too high and I don’t know his specifics, but based on the house bill his taxable income would have increased quite a bit having 40k of deductions gone plus losing the personal exemptions. That would be close to 50k minus the new standard deduction of 24k. Taxable income would increase by around 25k.

Senate bill would be slightly better for him losing just the real estate tax and exemptions so around 22k.

Taxable income would increase by that amount. The change in rates won’t offset that so he would see an increase.

 

[Merge]

The 25% is only part of it.

You have to run your taxable income through the bracket calculation.

For a given taxable income even though you're in the same 25% bracket you would pay less under the proposed plans than the current plan.

FYI - What I am calculating on married joint filer with AGI of 150k and 40k of deductions. Not sure if there are any other deductions to include, but they would decrease the amount due for current law more than the senate bill and equal to the house bill.

Current law - About 17k tax due
House bill - 24k standard deduction - 19.8k taxes due
Senate Bill - 26k itemized deduction (losing personal exemptions and real estate tax deduction) = 19.2k taxes due.

For discussions sake, assume 10k mortgage interest.
Current law - 14.5k taxes due
House bill - 19.8k taxes due (no change as all other deductions are lost and standard deduction still applies)
Senate bill - 17k taxes due

If you currently have deductions and no kids, you would get hosed a bit with these proposals.

 

[cernjSHU]

FYI - What I am calculating on married joint filer with AGI of 150k and 40k of deductions. Not sure if there are any other deductions to include, but they would decrease the amount due for current law more than the senate bill and equal to the house bill.

Current law - About 17k tax due
House bill - 24k standard deduction - 19.8k taxes due
Senate Bill - 26k itemized deduction (losing personal exemptions and real estate tax deduction) = 19.2k taxes due.

For discussions sake, assume 10k mortgage interest.
Current law - 14.5k taxes due
House bill - 19.8k taxes due (no change as all other deductions are lost and standard deduction still applies)
Senate bill - 17k taxes due

If you currently have deductions and no kids, you would get hosed a bit with these proposals.

It is what I have been saying with all of Trump's different variations of his tax plans that the upper middle class is going to get crushed meanwhile the rich get all the benefits.

Moreover, with the effective tax rate of corporations being 18.5%, what will be the effective tax rate be after lowering the tax rate to 20% yet not closing any of the loophoies?.

 

[Merge]

It is what I have been saying with all of Trump's different variations of his tax plans that the upper middle class is going to get crushed meanwhile the rich get all the benefits.

Moreover, with the effective tax rate of corporations being 18.5%, what will be the effective tax rate be after lowering the tax rate to 20% yet not closing any of the loophoies?.

Yep. So far it is a huge giveaway to corporations and the wealthy which we don't need. They are trying to smooth it over with modest cuts to the middle class.. and indeed families with multiple children would likely see a decrease in their taxes. Couples without kids, will be close to current law or more taxes.

Giving corporations more money is not going to increase investment. Some CEO's admitted as much during an interview with Cohn when they were asked if they would increase capital investment if the tax cuts went through. Very few raised their hands because trickle down is a BS concept. Corporations invest when investing makes them more money. They don't invest because they have more money.

http://www.businessinsider.com/trump-gop-tax-plan-gary-cohn-bill-2017-11

The mechanism for rich people to make more money is already there. Give a cut to the middle class. The middle class will spend more money which goes back into the economy, creates demand for corporations to invest, increases wages, stock prices rise, rich people earn more on their investments, tax revenues rise.

In a period of rising wages and expanding middle class, we can look at adjusting rates and lower them for wealthy individuals and increase them for the middle class.