90% of the population won’t have to itemize.
Awesome. The 30% who itemize save an extra 3 minutes of turbotax time but do so by increasing the tax on most of us who do itemize. Yip pee.
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Household income has to be more than $1 million to pay more tax. So you’re telling us that you earn more than $1M.
Both Jil and Jane don’t have AMT but have reduced tax, so their household income is between $500k to $1M.
If your tax is reduced from 30k to 20k, and your neighbor’s tax is reduced from 36k to 21k, will both of you be equally happy?
Your neighbor should be happy if he’s a reasonable guy. You? Depends on your personality, you could complain endlessly, or keep thanking the taxman. Your neighbor could still complain about losing the salt deduction and whatnot
Dream on if you think that rate relief is going to bring taxes down by enough to justify losing the SALT deduction as above average earner in California and still ending up with a lower tax bill. We still have to see what the final numbers look like, but I’ve done the rate relief chart for the house bill. At $240K of income for a married person, they are looking at slightly more than $5K of reduction from rate relief which will not come anywhere close to the loss of state tax deduction. And those that do continue to itemize will get hit with the loss of their personal exemption value of another $8K for married people. Non-itemizers will do ok since their personal exemption is effectively rolled into the new standard deduction.
And at the end of the day, the country will be $1.5 trillion further in the hole – but only if the rate relief is NOT renewed at its 10 year expiration. If (when) congress has to face that decision, we’ll see that number double.
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Excellent summary. This is what I have been telling ! Only few people understood the impact here !!
It is risible, laughable, and somehow depressing to see some posters jumping on one foot and cheering up for this disgraceful tax reform.
There’s such a hurry to have it done. Even, not allowing the new senator to be seated, something the idiot democrats have allowed the GOP to do in the past, something, again, that will set a precedent the day the coin is flipped and the GOP sees itself in the minority. Then, as they take credit for a good economy that usually the democrats recover, they will be crying like little babies asking for their elected candidates to sit in.
No matter how you paint this wagon, it is being done to satisfy the needs of those donors to the GOP. You can’t take a candy from a baby’s mouth with your right hand, while inserting the wrapper in his mouth with your left hand.
Anything else, pure BS.
It’s a tax hike for home owning Bay Area people
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You said: Sure, people who pay AMT don’t get SALT for AMT purposes. But the AMT is lower than the regular rate and you pay whichever is less. If you didn’t get have your itemized SALT deductions, you’d be paying more.
Is that right that you pay whichever is less? I thought that you calculate tax both ways and pay more if AMT is higher.
The only way to reduce you taxes is to move to Nevada or other low tax states.
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Someone I know is moving to North Las Vegas. He used to work from home anyways & will continue to work for the same company, and he’s getting a mansion for $250K there + he gets the 24K Std deduction and no need to itemize.
- Sure, people who pay AMT don’t get SALT for AMT purposes.
SALT is one of the itemized deductions. If total itemized deduction is exceeding some limit that reduces IRS final tax amount less than 28% (they have 26% and 28%, let me assume 28%) of AGI, AMT kicks in
- But the AMT is lower than the regular rate and you pay whichever is less.
Wrong, AMT means alternate Minimum tax. If your final tax is less than AMT, you pay AMT tax rate. this means "Whichever is higher (your final calculated tax or AMT)"
Since dougz gets this wrong, there could be more harder to detect errors in his computations and arguments.
If you have bought an expensive house with a large mortgage.
I did not go through his statements, but I see dougz has clarity on AMT and he knows what he is talking !
There are plenty of references in internet about AMT and most Californians are getting into AMT due to high State Income Tax or Stock options vesting etc.
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Read his statement.
Google results = “If you are subject to AMT, your tax bracket is 28% for AMT taxable income over $175,000. But your effective marginal tax rate is typically 35% for incomes of $300,000 to about $500,000.”
For those with 33% or 39.6% marginal tax rate, AMT is less at 28%. People at 39.6% MT level, pay higher SALT and it adds to MIRD (1.1M level) brings down the effective tax at 23%. AMT kicks in when calculated tax is less than 28%.
As I said, dougz knows in detail about AMT and he is 100% right.
You’re correct.
For Bay area a starter SFH in an average+/++ Neighborhood with drivable commute is $1M today.
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For CURRENT+NEW home owners:
LOSS: Property Tax deduction ONLY $10K. ( I bought a starter home in 2015 & my property tax is already much higher than 10k)
LOSS: SALT deduction : gone (This in my mind is the big deal )
For ONLY NEW home owners:
LOSS: Mortgage deductible ONLY till $750K
For renters:
Std Deduction up by @$200/month.(Assuming average net 20% tax payment). Hence incentive to buy is lower, especially for people who are not settled in.
Does anyone know if the tax free gain on holding 5 years as primary home applies to home purchases after this law is passed or does is apply to existing home owners too?(who have bought before this law)
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Now you arguing he is right and you’re wrong? 
Because he meant “rate” not “tax” 
The whole Discussion of AMT started, IIRC, when buyinghouse mentioned “Removing AMT” is favoring high income earners, but AMT is meaningless when SALT is removed.
Because he meant “rate” not “tax”
He is talking on rate, and I am taking about final tax !
The fact is we both are right.
Many people are not knowing about AMT (as they are not hit by it) and trying to know through arguments in this blog !
If anyone google it and read first 5 links, one by one, they will get full idea !
This is not a true picture. Sound like a Democrat trying to paint a phony picture.
Shouldn’t you include GAIN: Reduced tax rate, higher AMT cutoff and higher standard deduction.
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This is called ad hominem … but anyways… I respect my elders 
Higher std deduction is mentioned in my post & most home buyers itemize.
Reduced Tax brackets in my mind will not make up for the SALT deduction loss, but I haven’t seen any detailed posts making that calculation.
The detailed reports I have seen are from Moody’s(related to real estate in BA), but i’m sure nobody here has gone into the details or have blown off the report saying “they were wrong during the 2008 crisis” yada yada…
I find his conclusions wrt Jane’s comment are phony, it all depends how you compartmentalized stuff.
For example, you put $1k in a piggy bank, I put $1k into the same piggy bank, later the money in piggy bank is used to buy a bitcoin for $1.2k. How much of your money is used to pay for the bitcoin? Is it $200, $1k or somewhere in between?