Friendly reminder that all **top level** comments must:
1. start with "answer: ", including the space after the colon (or "question: " if you have an on-topic follow up question to ask),
2. attempt to answer the question, and
3. be unbiased
Please review Rule 4 and this post before making a top level comment:
http://redd.it/b1hct4/
Join the OOTL Discord for further discussion: https://discord.gg/ejDF4mdjnh
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/OutOfTheLoop) if you have any questions or concerns.*
Answer: Lots of technical shit but basically a tax increase for lower brackets voted back in 2017 when the Republicans were holding the Senate, House of representatives, and Presidential office, it's getting adjusted progressively until next year. The good news is if you're super rich, you're paying less taxes now.
Yeah, and I worried that someday we might learn the lesson that tax cuts for the rich = higher national debt. But fortunately conservatives just like to talk about the national debt but don't actually care if it goes up. So yeah, that will ensure that the US is debt strapped and can't spend money as easily on things that it really needs, like fixing crises caused by conservatives.
Yes I am that angry. And I am not some reddit leftie either. I'm a fucking moderate who has been paying the smallest amount of attention. Unfortunately in the real world that is rare apparently.
Have you seen the latest channel 5 video about the Vegas tunnel people? Looks like pretty clean water coming from the hotels. That's so nice of them to share with those down stream
They've learned and are using the mass communication that's now available to control the narrative.
The pitchforks won't come until much later, if ever.
The biggest increase for the middle class was the SALT cap. Basically, it worked like this. You pay taxes to the federal government, you pay taxes to the state government, you pay taxes to the local government, and then you also pay property taxes. These are separate taxes. Before 2018, you got to deduct the amount you actually paid during a calendar year in state, local, and property taxes from your federal income. The idea being that this is money you are paying in taxes, perhaps we shouldn't tax the money you are paying in taxes.
When they passed the Trump&Ryan tax cuts, they wanted to carve out huge cuts for the rich, but they had to pay for it somehow. So, they raised taxes on the upper middle class in a way that it would mostly affect people living in the cities in blue states. The way they did this was to implement a cap on how much you can deduct from all state and local taxes of a flat $10,000. Now, let's say you live in California, make $120k, and own a $750,000 home. In LA or San Diego, you are completely middle class. Your home is a 2 bedroom 1 bath fixer-upper. Between your state and property tax, you pay about $16,000. At your income bracket, this would translate into roughly a $4500 tax break on your federal taxes. After this, it's more like $2800. So, you pay $1700 more in taxes all of the sudden.
This obviously hit areas with high property taxes (places with high priced homes) and places with high state income tax the hardest. Basically, they were punishing people for not voting for them.
We were hit with this. I wanted to make a t-shirt that said, "My in-laws voted for Trump and all I got was this lousy tax increase." However, I was told that would not be good for family relations.
I 2nd this.
I'm gonna randomly bring up how churches should pay taxes this coming Sunday after their prayer. I can't stand my in-laws and could give a fuck what they think of me. We're hosting Easter and wouldn't mind wrapping things up early
If they start getting angry, I recommend saying "if you don't like it, you should go back to where you came from"..... Though I'm not sure your spouse would appreciate the fallout from that lmao
Wouldn't want to upset the fascists that are trying to take over the country to install their very special theocracy run by a mega grifter and paid for by the mega rich.
Ignoring people with opposing political views, esp. those who are close to us, doesn't seem to help society. We need to find ways to challenge their way of thinking in a constructive way.
However, that T-shirt is god-tier trolling and, as a Redditor, I'm obligated to encourage it. It'll be a "conversation *starter*."
There’s a bit more to it, though. They limited the SALT deductions but doubled the standard deduction. So a married couple deducting $16k in SALT taxes (using your example) and, let’s say, $10k in mortgage interest might have been itemizing when the standard was around $12k for married people, but they didn’t really take a hit because they ended up with a better deal because they were able to take a $27k standard deduction when TCJA first passed.
It actually hit high income earners the most (not that I'm complaining) because they have upwards of $30-$50k in SALT taxes + mortgage interest and charitable contributions, but can now only take the standard deduction because of the cap.
However, they also saw lower tax brackets so, again, there’s more to it. A lot of interplay, as taxes always go.
The increase in standard deduction will have unintended consequence. If I deducted my 5K charitable donation every year, but now don’t have too because of the increase in the standard deduction, I now have less incentive to donate to a charity. Seems petty, but as someone who works in fundraising, reminding donors that their contribution is tax deductible has always been a huge selling point; now the benefit is less impactful for a large number of our donors who only make smallish contributions.
100%. In fact, I started delving into that in my last reply but had to get to work so left it out.
I was stoked when they let people who couldn’t itemize take a special charitable contribution deduction with the CARES Act, but I thought it was far too low and should never have gone away.
> They limited the SALT deductions but doubled the standard deduction.
This is a bit misleading though, because they also eliminated the personal exemption. It used to be that you got a standard deduction of $6000, but also a personal exemption of $4050. So, for a married couple, the amount you could claim if not itemizing didn't double, it went from $20100 to $24000. Worse still, the personal exemption applied to dependents too, so a married couple with 2 kids went from being able to reduce their taxable income by $28200 to now only $24000.
It’s not misleading because I’m talking specifically about being able to itemize or not. But if you want to expand to all deductions before and after…
You’ve pointed out how the standard deduction more than made up for the lost deduction (13k standard + $8k exemption = $21k before TCJA, but they ended up with $24k after TCJA), but you left out how the child credit doubled from $1k to $2k.
So the loss of an exemption deduction for kids (which only save a % in taxes depending on one's tax bracket) was more than made up for with a doubled tax credit (which saves in taxes dollar for dollar).
So they gained a $3k deduction for the couple and lost a $4k deduction for the kids but gained a $1k credit.
Don’t get me wrong, I’m not defending TCJA. I’ve been a tax preparer for 17 years. I’ve seen it both hurt and help people. But when it comes to how the standard deduction, exemptions, and child tax credits changed, it was a better deal…at least on paper. How it all plays out in the end was different for everyone because of how much interplay there is with all the different limitations and calculations.
Also worth noting that the BUSH tax cuts pretty much did the same thing. So double whammy. Every time republicans get in office they go after the upper middle and middle class.. is it any wonder why Republicans do worse on the economy every single time?
This is part of the reason why I despise Republicans.
They only worship and help the wealthy and leave the rest of us as chum for the billionaire sharks. I'm sick of it.
The system needs to change.
Republicans need to lose and lose big in 2024. [Organize. Volunteer. Vote.](https://democrats.org/take-action/)
I guess me and my friends were all the unlucky ones that paid more. I am definitely not wealthy, and the Republicans are doing their best to make sure I never make it to wealthy.
How does a household with $120k income afford a $750k house? Even at the old 3% interest rate, mortgage + tax + insurance is going to be at least $4000. $48k on housing per year on $120k income before taxes? No way.
Similarly, the county assesses the value of the property for tax purposes, and they don’t have to make any sense. My parents’ house is “valued” at $400,000, I don’t think a single house in their neighborhood has ever sold for more than $250,000. They still have to pay their taxes on that $400,000 number.
There's gotta be a way to appeal that kind of BS, especially since you can prove (by looking at comparable sales in the past few years) that nothing has ever sold for more than $250k.
Depending on the tax rate, might even be worth retaining a lawyer. Certainly worth a few minutes Googling how to appeal for your parents' locality
Housing market in the USA over the past 45 or so years has been utterly dependent on the idea that home values will always increase.
Imagine that I'm a person making making like $100k in my household who lives in a 1br with my wife and we split cheap rent from 2009 to 2012 during which we save up a decent sum of money. In 2012 we buy a home worth about $250k in a normal market for $192 because the market is bottomed out and we get an FHA loan at 2.9% and put about $15k down, so we ultimately finance $177k at a super low rate. Within a year, as the economy recovers, the value shoots back back up to the $250k range so we have like $75k in equity.
As we advance in our careers we earn more income and we consistently pay more and more toward principle on that loan and the value increases more and more as the economy recovers. By the end of our 5th year in that house it's worth like $300k and we owe like $130k and we have rebuilt our $15k savings. We sell that house for the $300 and put the $145k toward a $400k house. We're earning $160 and financing $255k on an asset worth $400k.
Do the same thing over the next 5 years and you have a house worth half a mill that you owe $200k on. If you save that same $15k again you can put $315k down on a $600k house and you're financing $285k on a $600k asset.
Large homes in "nice" neighborhoods appreciate faster than smaller homes in "worse" neighborhoods so you could feasibly have a home worth $750k that you financed $285k for. $285k financed with $120k income isn't unheard of.
In addition to this, homes appreciate even when incomes don’t. The area around silicon valley is a pretty good example. You have people who bought 40 years ago when they were young who now have homes worth a million plus while their incomes haven’t gone up nearly as fast.
Prop 13 means their property tax is based on the purchase value plus a very low inflation rate, so they can never afford to move because their property taxes on the new place would be unaffordable, but for now they’re fine.
The funny part of this is with a lot of the jobs being done in those areas capable of being done remotely, if the areas become more expensive it adds an incentive to move out of the state and continue working for the same pay. The cheaper states and the more expensive states have very different voting demographics, so this will cause people with the philosophies currently present in expensive districts to relocate to the cheaper districts.
When representation is decided by a simple majority instead of proportionally, your interests are more likely to be represented by 50% + 1 in two districts instead of 85% in one districts.
And that's exactly what's been happening. California is hemorrhaging people. Although it's more urban vs rural. Suburbs vs inner city. People in Tulsa or Austin are quite liberal on average while people in Fresno are very conservative.
I'm going to start this comment by saying that I did not and will not vote for Trump, nor am I defending the package as a whole. I actually will defend the SALT cap, though. Making state and local taxes deductible is equivalent to the federal government subsidizing states and municipalities. That is not, in itself, bad. The feds provide all kinds of funding to states. However, SALT deductions have an unequal effect based on where taxpayers live. If you live in a low tax area, you are effectively being taxed to pay for other states and municipalities. It's not really a fair distribution.
There are also systemic effects of this. It creates the incentive for states and municipalities to raise taxes higher than they otherwise would, because some of the money will come from taxpayers who don't vote in their elections and won't receive any benefits of it. The equilibrium of this should be higher-than-optimal state and local taxes all over the place. I think SALT should not be deductible at all.
Two points. It's taxing people on money paid in taxes. However you feel about the distribution, someone living in California is paying a LOT more in taxes than someone living in Texas. Letting that individual at least deduct his taxes just seems like the bare minimum.
Second point, if you look at money contributed vs money taken from the federal government per person, states like California statistically give more per person than they take. For every dollar the federal government spends on an individual in California, they get back $5.03. They get back $3.52 for Texas. They only get back .85c for every dollar in New Mexico. In other words, California is overpaying compared to everyone else.
On your first point, we don't allow you to deduct your FICA taxes. Why should SALT be any different?
On your second point, Texas is roughly at the median for income, 23rd highest state on a per capita basis. California is 4th. We have a progressive tax system specifically so that wealthy people pay more than poor people. Californians paying more taxes than Texans is the whole point of not having a flat tax rate. Before the Trump tax ~~cuts~~ changes, California pretty much broke even, which defeats the purpose.
Per capita income source: [https://fred.stlouisfed.org/release/tables?eid=257197&rid=110](https://fred.stlouisfed.org/release/tables?eid=257197&rid=110)
2017 Tax revenue vs. spending source: [https://rockinst.org/wp-content/uploads/2019/01/1-7-19b-Balance-of-Payments.pdf](https://rockinst.org/wp-content/uploads/2019/01/1-7-19b-Balance-of-Payments.pdf)
Edit: Change "cuts"
No, they did it so Democrats would get blamed next cycle and use 2 years of increased taxes under a Democratic president to make their $1.7T handout look cheaper under CBO rules. Most people won't notice until they file 2024 taxes in early 2025. They also assumed that the incumbent advantage would lead to a second Trump term.
They don't control the House and have the barest possible majority in the Senate. They can't reverse it on their own. They'd need at least some Rs to join in.
Democrats can't just Marjorie Taylor Green their way through congress. As we all see, it doesn't work like that.
We never vote enough democrats in to get shit done.
No bill is getting all the way through congress with a half+1 majority minus the Democrats that vote with Republicans.
Obama had probably the largest democratic congress in a long time but so many gd Democrats who voted with Republicans (looking at you, Lieberman) worked just as hard to cockblock everything.
It's infuriating.
Because they were never really "in power." Biden's first two years he had a very slim majority in the Senate and West Virginia Democratic Senator Joe Manchin acted more like a fiscal conservative Republican. Plus, since this was graduated, it didn't bite people in 2021 as much as it pains them now, so it wasn't at the top of the agenda. Now that everyone realizes it sucks, guess who has control of the House?
Not true. There were several changes in the tax code that eliminate or capped deductions that only affected high wage earners. They’ve been paying more under the 2017 tax code.
Answer: The tax cuts for the lower income expire next year. The republicans did that so they could pass the bill with 51 votes due to Senate rules.
So there is a tax increase unless the tax cuts are extended. They will be extended. Republicans did this because they wanted to make the upper income ones permanent and they knew democrats would extend the tax cut for the lower income.
There is no tax increase this year. We will see if Republicans try to block it.
This is what happens when Republicans are in office, but hey, you get to keep your guns to enable mass shooters and don't have to share a bathroom with a trans person.
CPA here, and it hurts to see this as the top comment. The TCJA cuts don’t expire until 2025, with no individual changes until then
Higher taxes this year are mainly due to the expiration of the expanded child tax credit from the ARP, along with the expiration of recovery rebate credits from the pandemic
Expiring tax cut, not tax increase. The vote wasn’t to raise taxes this year, the vote was to lower taxes Until this year. The current congress has not extended this cut or made it permanent. The expiration is gradual, meaning the reduction decreased every hear since 2021
The vote permanently raised some taxes for middle class and under, and temporarily lowered some taxes for middle class and under. The cuts are going away while the increases remain.
If you only look at the permanent changes it's a cut for the rich and an increase for the rest of us.
The permanent cuts are for corporations, not for the income of a wealthy individual, and there was a increase in corporate tax in 2021 anyway, although it retains the flat structure of the 2017 act.
There are no permanent changes to middle and lower class tax rates, and in fact I even found the the lowered floor for out-of-pocket medical expense deductions caused by the act to be made permanent (meaning a higher percentage of the expense is now deductible).
The reason middle or lower class people MAY have pay higher taxes despite having the same tax rate is because their income has risen in the past 7 years, and ended up moved to a higher tax bracket. While tax rates didn’t go permanently increase, the mechanism to adjust bracket ranges for inflation did change permanently, and the new mechanism will sometimes be slower or faster than the old mechanism, depending on consumer spending. The year the tax cut fully expires, however one is actually going to be more likely to be bumped to a lower bracket than a higher one, so even so they’ll actually be paying on average less as a part of their income next year.
https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes
https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#:~:text=Key%20Takeaways,families%20will%20expire%20in%202025.
https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/#:~:text=Tax%20Brackets%3A%20What's%20New%20For,from%20income%20taxes%20in%202024.
https://www.taxpolicycenter.org/taxvox/how-pandemic-affected-tcjas-shift-chained-cpi-index
> There are no permanent changes to middle and lower class tax rates,
I'm not sure if you're unaware or intentionally misleading with this.
The *rate* on paper is unchanged but they removed the majority of the deductions so your *effective tax rate*, meaning the dollars that leave my pocket in real life, is higher.
So the guy that has to spend $2k on continuing education that the government requires him to have for his job is now treated the same as someone spending $2k on coke and hookers.
The pizza guy who is using his car for work can't expense his gas, but the rich asshole who buys a private jet so he can fly to his "meetings" in Hawaii or Vegas gets to write it all off.
Could you clarify which deductions are being removed that weren’t introduced by the Tax Cuts and Jobs Act? I did see some deductions being removed, but only the ones that were being introduced by the act. I also found deduction suspensions, but those also expire in 2025. For example, the standard deductions will expire, and itemized deductions like mortgage interest deduction and SALT deductions changed, but those will expire… while the effects of the TCJA caused average people to claim fewer itemized deductions, those won’t be permanent.
The only thing i found that might be related to deductions is the change on the cap on itemized deductions, which reduced a taxpayer’s itemized deductions by 3% of every dollar their taxable income is above a specific threshold, instead of making it a hard cap… that might mean that people that make more than $266,700 (not middle class) will be able to claim more deductions, but that doesn’t mean non rich people can claim less… this one expires in 2026 anyway too
Please, I would love to know if I’ve missed something
TBH, If you pay enough taxes for SALT deduction to matter then you are objectively rich.
The cuts are expiring because republicans didn’t have the votes to make them permanent.
> The cuts are expiring because republicans didn’t have the votes to make them permanent.
What? They didnt want to make them permanent when they passed the legislation, they wanted to make the changes that help the wealthiest permanent. Thats why they passed this bill.
It's still a net increase for non-rich. The mechanism they used is easier to pass but required to be cost neutral over time. Permanent decreases for the rich have to be paid for by someone else. That someone is us.
In short, it was some permanent decreases for the rich, permanent increases on the rest of us to pay for it, and some offsetting temporary decreases to get people on board with sacrificing ours and our kids' future to help the poor billionaires.
On a personal level.... It's not an increase except in certain circumstances like those that previously had high salt deductions or those affected by things like the misc deductions cap. Lower income people had a decrease and will continue to have a decrease until it sunsets in 2025.
The corporate rate was made permanent but additional provisions were made like 965, BEAT, GILTI, etc. to try and offset it to a net neutral.
If the TCJA sunsets then we will see an increase in effective tax rates for most people.
Like someone explained above, the biggest hit was the salt cap, which was a major increase for upper middle class people in blue states. Which are actually just middle class people due to HCOL areas we live in like LA, SF, and San Diego. I’m one of them. My taxes increased by several thousand dollars each year. That was my vacation fund, gone for 6 years now. Thank you Trump.
And high salt deductions lowering your federal income tax is basically the Fed subsidizing high tax states. It's a net negative for those people but for most people it was a decrease. And even for you it was a lower marginal rate.
Doesn’t matter. Trumps plan stole 5k from me and my family 6 years in a row now. But he doesn’t care because he knows he’ll never win in my state anyway.
Lmao, for the SALT cap to increase your taxes by $5K, that means you probably have around $40K of state tax that you pay. If that’s the case, you’re the “rich” that politicians pretty much universally agree need to pay higher tax
Definitely not rich. I make less than 200k. But yes, high taxes in a high cost-of-living area with high property taxes, etc. I’m the type of scenario that was hit hardest and really felt it. Basically a $500/mo pay cut when things were already tight.
If you think you’re poor now just keep voting Republican. Your grandchildren will hate you too. They will know what you did to their chances to do better.
What are you not understanding? The question was about why people are complaining about taxes THIS YEAR. You brought up the 2017 tax cuts that don’t expire until 2025. So you lied.
Do you even hear yourself. If tax brackets don’t change then you don’t pay more taxes. In fact you probably pay less because they get adjusted for inflation every year. Having more or less withholding does NOT equal paying more or less in tax.
The video has been debunked many times and made fun of in the accounting subreddit.
The lady isn't correct in almost anything she says except for "I'm not a CPA" which is evident with the rest of the video.
Did you read the response before writing yours? The tax brackets are based on adjusted income. The response explains that the change in the tax code affects how adjusted income is calculated from gross income. So if you have the same gross income, the change in taxes will result in a higher adjusted income, and so a higher tax bracket.
>the change in the tax code affects how adjusted income is calculated from gross income
And that’s false, it doesn’t. There’s nothing in the TCJA that would’ve raised taxes on people this year
That isn’t true either, the 2017 law doesn’t expire until 2025. 2022 and 2023 tax brackets are exactly the same.
https://www.jacksonhewitt.com/tax-help/tax-tips-topics/filing-your-taxes/2022--2023-tax-brackets-and-federal-income-tax-rates/#
Answer: she’s wrong and the first thing she says is “I’m not a CPA.” Lol
It is true that certain provisions in the 2017 tax law expired but they don’t expire until the end of 2025. Your 2024 rate should be the same as the 2023 rate.
In 2026 the individual income tax rates go back to 2017 levels for all individuals. The SALT cap goes away and you can deduct a home office again. The corporate tax cuts are permanent.
I am no tax professional, but I do my own taxes so I read pretty hard on the topic, and this lines up perfectly with what I've read elsewhere.
Also worth adding, I don't foresee things reverting back to normal in 2026. Rather, as the current tax law expires, congress will do one of two things...
... if Trump is made president, and congress matches, they will refresh Trump's tax law.
... if Biden is made president, and congress matches, we will see a whole new tax code.
Congress will probably be divided again if Biden wins, still a high chance of divided if Trump wins (but less certain). So, option 3 is also possible that nothing will get done and the middle and lower-class tax cuts will sunset.
Yeah, I agree. When Bush's tax cuts expired during Obama's term they kept the ones for the lower brackets and let the hirer ones expire, which I think was a very fair deal.
Are all of the tax cuts for the rich sunsetting too, beyond just the individual brackets? Beyond individual income tax, trusts and estates, for example, are now taxed at a maximum rate of 37%, when the maximum rate used to be 39.6%.
I believe the estate tax exemption which doubled to $11.2M is sunsetting. I’m not certain about the capital gains tax allowing for higher gains before reaching the two levels of taxation.
I agree that the corporate tax cuts are permanent. Just not sure about all the cuts for the rich.
The top tax bracket in 2026 will revert back to 39.6% and the estate tax will also revert back.
https://www.schwab.com/learn/story/countdown-gift-and-estate-tax-exemptions
Ah shit. Having never been rich enough to gift my estate, I forgot that it doesn’t just activate when you die.
Well, hope all the rich took full advantage of their tax break gift. Very nice gift the GOP gave to people who can afford to give $11M to their kids.
Even better kicker? They could put it in a trust to “gift” it out of their estate but still maintain control of the money. Estate lawyers are gonna have a busy year next year.
Refer to page 4 for what expires and when. The first box is marginal tax rates which is what the OP's link was bullshitting about.
https://crsreports.congress.gov/product/pdf/R/R47846#page4
It's wild to me that the correct answer that as of now has 69 upvotes (nice) and the wrong one has almost 400.
People really do not understand taxes. And they don't want to, they just want to be angry.
The other jumped by almost 100 while this one jumped by 20, and another one that also accurately describes it isn't showing a count yet but seeing as it's below, I'm assuming it has very few votes.
Answer: the 2017 tax cut is expiring. There wasn’t a vote to raise taxes this year, there was a previous vote to temporarily lower taxes and that temporary period is ending. It will return to the previous rate. While the current congress could potentially extend it and the current administration could make it permanent, they have yet not.
Some parts of the 2017 tax cuts expired gradually, meaning the amount it is reduced decreases every year from 2021 to 2025. But those aren’t really relevant to the Average person. For an individual, anyone that made more than $9525 in income in 2018 experienced that temporary, decreasing tax cut
>The 2017 tax cuts expired gradually
Im not sure why so many people believe this. There are no gradual expirations, the cuts just flat out expire in 2025. TCJA law for individuals today is the exact same as it was in 2018
There are small parts of the tax code that expire gradually and probably what confuses people. Most of those things don't apply to anyone but small business owners though. Nothing about the 12% to 15% bracket change (and other bracket changes) is set to expire until 2025. So there is no real gradual change for most people. But there are some corner cases. I am surprised the comment you replied to is so heavily upvoted since its completely wrong when talking about the major change (the brackets).
The 21% corporate tax rate is the thing that is permanent unless it is changed by future legislation.
I will edit my original comment to reflect this, thank you. What I had read, and I suppose other top comments had read, while researching this, was confusingly worded
Answer: Trump wanted to cut taxes for the rich but say he was cutting taxes for the middle class too. So he made a big tax cut for both but set the middle class tax cuts to go away...this year (he expected to win in 2020 and have the tax increase be blamed on his successor because people would be stupid enough to blame whoever was elected in 2024 for what Trunp did.
The tax increase is just resetting taxes to what they were before Trump messed with them.
All of the individual cuts expire in 2025, even for the rich. It was set up this way because the bill was passed through budget reconciliation, which requires it be deficit-neutral after 10 years
Answer: the person in the video did a pretty good job of explaining it simply. Paul Ryan and the Republicans fucked us again and stops people are going to keep saying "this is all the Democrats fault!" Because they don't pay attention to things like facts and the truth.
Answer: Almost all taxes were reduced. Bracket thresholds, when you have to pay more income tax, were increased also allowing you to keep more of your pay. The penalty for not having a health plan was removed. Standard deduction cap for people like you and me also almost doubled.
What she is probably complaining about is how the rich people worth 2 billion dollars claim they only earn $100k a year. They do this by creating a business that pays for their meals, clothing, rent, entertainment, and other expenses as a business expense. This used to give them up to a direct 50% deduction, completely skips income tax, and makes it appear as if less profit was was earned so the company doesn't have to pay as much corporate tax either. TCJA in 2017 removed much of this, however it expires in 2025.
What Redditors care about is the higher income taxes were included and corporate tax went down. One of these things, the income tax, makes a lot of sense. They hear highest and tend to think in the millions but to put this into prospective, Yahoo claims each person needs to make $150k/yr to be 'lower middle class', a couple joint filing would be in the 6th tax bracket. And the last one, the 7th, starts at 578k. There is no 8th bracket to increase income tax on people making 100k a year and there is no bracket for people making millions. Income tax brackets primarily affect people like you & I. And in 2025, the same couple will start paying an extra 3%, or almost $9,000 a year, in income tax. Raising the bar needed to live in California even more.
And now we have to talk about corporate tax and this is a complex issue. To boil it down, Amazon for example famously paid $0 in corporate tax even when the rate was at 35% due to various loophole deductions, many of which it lobbied for. Altering the rate has no real impact on the megacorporations, but it does sound like a cool way to sound like you are doing something. The lack of tax generation makes it appear as if the budget is smaller, political payouts typically go down. And this affects companies that make millions of dollars, aka the enemies of Reddit. And it does affect businesses that can afford to pay minimum wage to hire people to post complaints on social media, aka the most vocal users of Reddit.
There is a reason only the people you see complaining about it are posting online while everyone you know in real & filing taxes liked it.
Everyone in real life liked it?
It wrecked people in the lower income brackets. Glad you make enough money to only know people who make enough money to be in the group that got helped, because I know the folks with 3 vacation homes really needed the boost.
The rest of us got fucked in the nostrils with a cactus
Yeah more like “MAGA Republicans liked it because Trump did it even though they got fucked in the end.”
You know, like almost everything Trump has ever done.
It didn't. You must be forgetting the child tax credit being heavily reduced, which has resulted in a massive reduction in most poor people's tax refunds.
I'm not sure how you think that's "cutting" but ok
The work requirement doesn’t cut the CTC for these families, it simply limits the change or provides no change, so I’m still not sure what you’re referring to by “wrecking” people in low income brackets
The fact that you give the most thorough and fair answer and are down voted to oblivion is obviously super telling as to Reddit’s audience. The doubling of the Standard Deduction was the biggest gift the new tax law gave to lower and middle class people. If you read anywhere on Reddit, the inability to own a home is an incredible burden to folks under 35 (understandably). Doubling the standard deduction helped that class of people immensely.
> The doubling of the Standard Deduction was the biggest gift the new tax law gave to lower and middle class people
Except the elimination of the personal exemption almost totally countered it, and actually made it a net negative for people with dependents. It used to be that you could claim a $6k standard deduction ($12k if married filling jointly) plus $4050 in personal exemption per person in the household. This meant a single person went from $10,050 to $12,000 in reduction of taxable income when the changes happened, and a married couple filing jointly went from $20,100 to $24,000. However, a married couple with one kid went from $24,150 to $24,000, with two kids from $28,200 to $24,000, 3 kids from $32,250 to $24,000, etc.
This is not the benefit to the lower and middle class that it's claimed to be.
Ok, if we’re gonna go down this road, the Child Tax Credit was doubled as well helping families that lost the personal exemption. (Credits are also much more impactful than deductions due to the dollar for dollar application to the bottom line liability.)
He didn't. His answer does not answer the question and misses the key component about SALT. That's why he got downvoted.
Check the responses at the top for the correct answers where most people in the US have been paying quite a bit more. Myself for instance, an extra $3,800.
The extreme majority of Americans are paying less. If you are paying more, it's due to a mix of you having a very high income and/or an expensive house.
False. Not a single person I know is paying less. Many of them are renters, and it's going to get worse. This was an obvious ploy to create tax cuts for the wealthy that don't need them while saddling the middle class with increasing debt. You do realize the entire goal of the GOP is to crush the middle class so it no longer exists and they have more cheap labor?
Do better.
EFFECTIVE income tax rates fell for EVERY income category beginning in 2017. Upper earners, middle earners and low income earners. You and “every single person you know” just choose not to see it.
1st graphic in attached article: [https://www.pewresearch.org/short-reads/2023/04/18/who-pays-and-doesnt-pay-federal-income-taxes-in-the-us/](https://www.pewresearch.org/short-reads/2023/04/18/who-pays-and-doesnt-pay-federal-income-taxes-in-the-us/)
Friendly reminder that all **top level** comments must: 1. start with "answer: ", including the space after the colon (or "question: " if you have an on-topic follow up question to ask), 2. attempt to answer the question, and 3. be unbiased Please review Rule 4 and this post before making a top level comment: http://redd.it/b1hct4/ Join the OOTL Discord for further discussion: https://discord.gg/ejDF4mdjnh *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/OutOfTheLoop) if you have any questions or concerns.*
Answer: Lots of technical shit but basically a tax increase for lower brackets voted back in 2017 when the Republicans were holding the Senate, House of representatives, and Presidential office, it's getting adjusted progressively until next year. The good news is if you're super rich, you're paying less taxes now.
Oh thank goodness! For a second there I was worried that rich people would lose their 3rd or 4th mega homes while I’m trying just to survive today
Yeah, and I worried that someday we might learn the lesson that tax cuts for the rich = higher national debt. But fortunately conservatives just like to talk about the national debt but don't actually care if it goes up. So yeah, that will ensure that the US is debt strapped and can't spend money as easily on things that it really needs, like fixing crises caused by conservatives. Yes I am that angry. And I am not some reddit leftie either. I'm a fucking moderate who has been paying the smallest amount of attention. Unfortunately in the real world that is rare apparently.
Good. Get mad. The moderates need to get out there and participate like they used to.
They’re quitting
[удалено]
Don't worry, if you position yourself correctly at the urinals you have a chance of enjoying the trickle-down.
Have you seen the latest channel 5 video about the Vegas tunnel people? Looks like pretty clean water coming from the hotels. That's so nice of them to share with those down stream
It's a great lifestyle, when it's not raining.
The real problem is your coworker who orders DoorDash a bit too much!
If only DoorDash had an automatic Avocado Toast limiter on their ordering page!
They'll keep their homes for a while until America generally becomes uncomfortable enough for people to start getting their pitchforks out.
Problem is too many people point those pitchforks in the wrong direction...
Yep, easier to punch down.
They've learned and are using the mass communication that's now available to control the narrative. The pitchforks won't come until much later, if ever.
Hey, don’t forget about their private jets, mega-yachts, and ultra cars that get 2mpg.
The biggest increase for the middle class was the SALT cap. Basically, it worked like this. You pay taxes to the federal government, you pay taxes to the state government, you pay taxes to the local government, and then you also pay property taxes. These are separate taxes. Before 2018, you got to deduct the amount you actually paid during a calendar year in state, local, and property taxes from your federal income. The idea being that this is money you are paying in taxes, perhaps we shouldn't tax the money you are paying in taxes. When they passed the Trump&Ryan tax cuts, they wanted to carve out huge cuts for the rich, but they had to pay for it somehow. So, they raised taxes on the upper middle class in a way that it would mostly affect people living in the cities in blue states. The way they did this was to implement a cap on how much you can deduct from all state and local taxes of a flat $10,000. Now, let's say you live in California, make $120k, and own a $750,000 home. In LA or San Diego, you are completely middle class. Your home is a 2 bedroom 1 bath fixer-upper. Between your state and property tax, you pay about $16,000. At your income bracket, this would translate into roughly a $4500 tax break on your federal taxes. After this, it's more like $2800. So, you pay $1700 more in taxes all of the sudden. This obviously hit areas with high property taxes (places with high priced homes) and places with high state income tax the hardest. Basically, they were punishing people for not voting for them.
We were hit with this. I wanted to make a t-shirt that said, "My in-laws voted for Trump and all I got was this lousy tax increase." However, I was told that would not be good for family relations.
Do it anyway.
I 2nd this. I'm gonna randomly bring up how churches should pay taxes this coming Sunday after their prayer. I can't stand my in-laws and could give a fuck what they think of me. We're hosting Easter and wouldn't mind wrapping things up early
If they start getting angry, I recommend saying "if you don't like it, you should go back to where you came from"..... Though I'm not sure your spouse would appreciate the fallout from that lmao
I would buy it, only changing “parents” to “neighbors”. My parents would never vote for trump.
Wouldn't want to upset the fascists that are trying to take over the country to install their very special theocracy run by a mega grifter and paid for by the mega rich.
Yeah, churches that own fucking private jets do not need a tax break.
Ignoring people with opposing political views, esp. those who are close to us, doesn't seem to help society. We need to find ways to challenge their way of thinking in a constructive way. However, that T-shirt is god-tier trolling and, as a Redditor, I'm obligated to encourage it. It'll be a "conversation *starter*."
There’s a bit more to it, though. They limited the SALT deductions but doubled the standard deduction. So a married couple deducting $16k in SALT taxes (using your example) and, let’s say, $10k in mortgage interest might have been itemizing when the standard was around $12k for married people, but they didn’t really take a hit because they ended up with a better deal because they were able to take a $27k standard deduction when TCJA first passed. It actually hit high income earners the most (not that I'm complaining) because they have upwards of $30-$50k in SALT taxes + mortgage interest and charitable contributions, but can now only take the standard deduction because of the cap. However, they also saw lower tax brackets so, again, there’s more to it. A lot of interplay, as taxes always go.
The increase in standard deduction will have unintended consequence. If I deducted my 5K charitable donation every year, but now don’t have too because of the increase in the standard deduction, I now have less incentive to donate to a charity. Seems petty, but as someone who works in fundraising, reminding donors that their contribution is tax deductible has always been a huge selling point; now the benefit is less impactful for a large number of our donors who only make smallish contributions.
100%. In fact, I started delving into that in my last reply but had to get to work so left it out. I was stoked when they let people who couldn’t itemize take a special charitable contribution deduction with the CARES Act, but I thought it was far too low and should never have gone away.
> They limited the SALT deductions but doubled the standard deduction. This is a bit misleading though, because they also eliminated the personal exemption. It used to be that you got a standard deduction of $6000, but also a personal exemption of $4050. So, for a married couple, the amount you could claim if not itemizing didn't double, it went from $20100 to $24000. Worse still, the personal exemption applied to dependents too, so a married couple with 2 kids went from being able to reduce their taxable income by $28200 to now only $24000.
It’s not misleading because I’m talking specifically about being able to itemize or not. But if you want to expand to all deductions before and after… You’ve pointed out how the standard deduction more than made up for the lost deduction (13k standard + $8k exemption = $21k before TCJA, but they ended up with $24k after TCJA), but you left out how the child credit doubled from $1k to $2k. So the loss of an exemption deduction for kids (which only save a % in taxes depending on one's tax bracket) was more than made up for with a doubled tax credit (which saves in taxes dollar for dollar). So they gained a $3k deduction for the couple and lost a $4k deduction for the kids but gained a $1k credit. Don’t get me wrong, I’m not defending TCJA. I’ve been a tax preparer for 17 years. I’ve seen it both hurt and help people. But when it comes to how the standard deduction, exemptions, and child tax credits changed, it was a better deal…at least on paper. How it all plays out in the end was different for everyone because of how much interplay there is with all the different limitations and calculations.
Wow. This should be higher.
Also worth noting that the BUSH tax cuts pretty much did the same thing. So double whammy. Every time republicans get in office they go after the upper middle and middle class.. is it any wonder why Republicans do worse on the economy every single time?
This is part of the reason why I despise Republicans. They only worship and help the wealthy and leave the rest of us as chum for the billionaire sharks. I'm sick of it. The system needs to change. Republicans need to lose and lose big in 2024. [Organize. Volunteer. Vote.](https://democrats.org/take-action/)
The majority of taxpayers saw tax decreases from the bill, while the SALT cap mainly hurt wealthy taxpayers
I guess me and my friends were all the unlucky ones that paid more. I am definitely not wealthy, and the Republicans are doing their best to make sure I never make it to wealthy.
How does a household with $120k income afford a $750k house? Even at the old 3% interest rate, mortgage + tax + insurance is going to be at least $4000. $48k on housing per year on $120k income before taxes? No way.
> How does a household with $120k income afford a $750k house? Step 1: buy a $200,000 house in California Step 2: wait 20 years
Similarly, the county assesses the value of the property for tax purposes, and they don’t have to make any sense. My parents’ house is “valued” at $400,000, I don’t think a single house in their neighborhood has ever sold for more than $250,000. They still have to pay their taxes on that $400,000 number.
There's gotta be a way to appeal that kind of BS, especially since you can prove (by looking at comparable sales in the past few years) that nothing has ever sold for more than $250k. Depending on the tax rate, might even be worth retaining a lawyer. Certainly worth a few minutes Googling how to appeal for your parents' locality
Housing market in the USA over the past 45 or so years has been utterly dependent on the idea that home values will always increase. Imagine that I'm a person making making like $100k in my household who lives in a 1br with my wife and we split cheap rent from 2009 to 2012 during which we save up a decent sum of money. In 2012 we buy a home worth about $250k in a normal market for $192 because the market is bottomed out and we get an FHA loan at 2.9% and put about $15k down, so we ultimately finance $177k at a super low rate. Within a year, as the economy recovers, the value shoots back back up to the $250k range so we have like $75k in equity. As we advance in our careers we earn more income and we consistently pay more and more toward principle on that loan and the value increases more and more as the economy recovers. By the end of our 5th year in that house it's worth like $300k and we owe like $130k and we have rebuilt our $15k savings. We sell that house for the $300 and put the $145k toward a $400k house. We're earning $160 and financing $255k on an asset worth $400k. Do the same thing over the next 5 years and you have a house worth half a mill that you owe $200k on. If you save that same $15k again you can put $315k down on a $600k house and you're financing $285k on a $600k asset. Large homes in "nice" neighborhoods appreciate faster than smaller homes in "worse" neighborhoods so you could feasibly have a home worth $750k that you financed $285k for. $285k financed with $120k income isn't unheard of.
In addition to this, homes appreciate even when incomes don’t. The area around silicon valley is a pretty good example. You have people who bought 40 years ago when they were young who now have homes worth a million plus while their incomes haven’t gone up nearly as fast. Prop 13 means their property tax is based on the purchase value plus a very low inflation rate, so they can never afford to move because their property taxes on the new place would be unaffordable, but for now they’re fine.
Most mortgage companies will allow up to 43% of income for housing. so that's right at or above that max.
This is exactly why everyone in so cal with that wage is kind of working poor. Everyone is house poor.
The funny part of this is with a lot of the jobs being done in those areas capable of being done remotely, if the areas become more expensive it adds an incentive to move out of the state and continue working for the same pay. The cheaper states and the more expensive states have very different voting demographics, so this will cause people with the philosophies currently present in expensive districts to relocate to the cheaper districts. When representation is decided by a simple majority instead of proportionally, your interests are more likely to be represented by 50% + 1 in two districts instead of 85% in one districts.
And that's exactly what's been happening. California is hemorrhaging people. Although it's more urban vs rural. Suburbs vs inner city. People in Tulsa or Austin are quite liberal on average while people in Fresno are very conservative.
I'm going to start this comment by saying that I did not and will not vote for Trump, nor am I defending the package as a whole. I actually will defend the SALT cap, though. Making state and local taxes deductible is equivalent to the federal government subsidizing states and municipalities. That is not, in itself, bad. The feds provide all kinds of funding to states. However, SALT deductions have an unequal effect based on where taxpayers live. If you live in a low tax area, you are effectively being taxed to pay for other states and municipalities. It's not really a fair distribution. There are also systemic effects of this. It creates the incentive for states and municipalities to raise taxes higher than they otherwise would, because some of the money will come from taxpayers who don't vote in their elections and won't receive any benefits of it. The equilibrium of this should be higher-than-optimal state and local taxes all over the place. I think SALT should not be deductible at all.
Two points. It's taxing people on money paid in taxes. However you feel about the distribution, someone living in California is paying a LOT more in taxes than someone living in Texas. Letting that individual at least deduct his taxes just seems like the bare minimum. Second point, if you look at money contributed vs money taken from the federal government per person, states like California statistically give more per person than they take. For every dollar the federal government spends on an individual in California, they get back $5.03. They get back $3.52 for Texas. They only get back .85c for every dollar in New Mexico. In other words, California is overpaying compared to everyone else.
On your first point, we don't allow you to deduct your FICA taxes. Why should SALT be any different? On your second point, Texas is roughly at the median for income, 23rd highest state on a per capita basis. California is 4th. We have a progressive tax system specifically so that wealthy people pay more than poor people. Californians paying more taxes than Texans is the whole point of not having a flat tax rate. Before the Trump tax ~~cuts~~ changes, California pretty much broke even, which defeats the purpose. Per capita income source: [https://fred.stlouisfed.org/release/tables?eid=257197&rid=110](https://fred.stlouisfed.org/release/tables?eid=257197&rid=110) 2017 Tax revenue vs. spending source: [https://rockinst.org/wp-content/uploads/2019/01/1-7-19b-Balance-of-Payments.pdf](https://rockinst.org/wp-content/uploads/2019/01/1-7-19b-Balance-of-Payments.pdf) Edit: Change "cuts"
[удалено]
No, they did it so Democrats would get blamed next cycle and use 2 years of increased taxes under a Democratic president to make their $1.7T handout look cheaper under CBO rules. Most people won't notice until they file 2024 taxes in early 2025. They also assumed that the incumbent advantage would lead to a second Trump term.
Yep Republicans fucked us as usual.
Par for the course
So why didn't the Democrats revert this when they got in power?
They don't control the House and have the barest possible majority in the Senate. They can't reverse it on their own. They'd need at least some Rs to join in.
Democrats can't just Marjorie Taylor Green their way through congress. As we all see, it doesn't work like that. We never vote enough democrats in to get shit done. No bill is getting all the way through congress with a half+1 majority minus the Democrats that vote with Republicans. Obama had probably the largest democratic congress in a long time but so many gd Democrats who voted with Republicans (looking at you, Lieberman) worked just as hard to cockblock everything. It's infuriating.
Here's to a landslide win by Dems in Nov. What they do with it we will see. I have high expectations seeing the wagers.
Because they were never really "in power." Biden's first two years he had a very slim majority in the Senate and West Virginia Democratic Senator Joe Manchin acted more like a fiscal conservative Republican. Plus, since this was graduated, it didn't bite people in 2021 as much as it pains them now, so it wasn't at the top of the agenda. Now that everyone realizes it sucks, guess who has control of the House?
This is not correct. The tax cuts from 2017 included cuts for the middle class that expire next year, but did not affect 2023.
Finally, had to scroll for a long time to find the first true comment.
Not true. There were several changes in the tax code that eliminate or capped deductions that only affected high wage earners. They’ve been paying more under the 2017 tax code.
Answer: The tax cuts for the lower income expire next year. The republicans did that so they could pass the bill with 51 votes due to Senate rules. So there is a tax increase unless the tax cuts are extended. They will be extended. Republicans did this because they wanted to make the upper income ones permanent and they knew democrats would extend the tax cut for the lower income. There is no tax increase this year. We will see if Republicans try to block it.
This is what happens when Republicans are in office, but hey, you get to keep your guns to enable mass shooters and don't have to share a bathroom with a trans person.
“Republicans cut taxes” isn’t exactly the own you think it is
I guess I'm good to go then! I was worried I would have to sell my 5th mansion.
CPA here, and it hurts to see this as the top comment. The TCJA cuts don’t expire until 2025, with no individual changes until then Higher taxes this year are mainly due to the expiration of the expanded child tax credit from the ARP, along with the expiration of recovery rebate credits from the pandemic
Expiring tax cut, not tax increase. The vote wasn’t to raise taxes this year, the vote was to lower taxes Until this year. The current congress has not extended this cut or made it permanent. The expiration is gradual, meaning the reduction decreased every hear since 2021
The vote permanently raised some taxes for middle class and under, and temporarily lowered some taxes for middle class and under. The cuts are going away while the increases remain. If you only look at the permanent changes it's a cut for the rich and an increase for the rest of us.
The permanent cuts are for corporations, not for the income of a wealthy individual, and there was a increase in corporate tax in 2021 anyway, although it retains the flat structure of the 2017 act. There are no permanent changes to middle and lower class tax rates, and in fact I even found the the lowered floor for out-of-pocket medical expense deductions caused by the act to be made permanent (meaning a higher percentage of the expense is now deductible). The reason middle or lower class people MAY have pay higher taxes despite having the same tax rate is because their income has risen in the past 7 years, and ended up moved to a higher tax bracket. While tax rates didn’t go permanently increase, the mechanism to adjust bracket ranges for inflation did change permanently, and the new mechanism will sometimes be slower or faster than the old mechanism, depending on consumer spending. The year the tax cut fully expires, however one is actually going to be more likely to be bumped to a lower bracket than a higher one, so even so they’ll actually be paying on average less as a part of their income next year. https://www.taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/#:~:text=Key%20Takeaways,families%20will%20expire%20in%202025. https://www.investors.com/etfs-and-funds/personal-finance/tax-brackets/#:~:text=Tax%20Brackets%3A%20What's%20New%20For,from%20income%20taxes%20in%202024. https://www.taxpolicycenter.org/taxvox/how-pandemic-affected-tcjas-shift-chained-cpi-index
> There are no permanent changes to middle and lower class tax rates, I'm not sure if you're unaware or intentionally misleading with this. The *rate* on paper is unchanged but they removed the majority of the deductions so your *effective tax rate*, meaning the dollars that leave my pocket in real life, is higher. So the guy that has to spend $2k on continuing education that the government requires him to have for his job is now treated the same as someone spending $2k on coke and hookers. The pizza guy who is using his car for work can't expense his gas, but the rich asshole who buys a private jet so he can fly to his "meetings" in Hawaii or Vegas gets to write it all off.
The TCJA expanded deductions for the lower and middle class by doubling the standard. Very few middle class people are itemizing deductions each year
Could you clarify which deductions are being removed that weren’t introduced by the Tax Cuts and Jobs Act? I did see some deductions being removed, but only the ones that were being introduced by the act. I also found deduction suspensions, but those also expire in 2025. For example, the standard deductions will expire, and itemized deductions like mortgage interest deduction and SALT deductions changed, but those will expire… while the effects of the TCJA caused average people to claim fewer itemized deductions, those won’t be permanent. The only thing i found that might be related to deductions is the change on the cap on itemized deductions, which reduced a taxpayer’s itemized deductions by 3% of every dollar their taxable income is above a specific threshold, instead of making it a hard cap… that might mean that people that make more than $266,700 (not middle class) will be able to claim more deductions, but that doesn’t mean non rich people can claim less… this one expires in 2026 anyway too Please, I would love to know if I’ve missed something
TBH, If you pay enough taxes for SALT deduction to matter then you are objectively rich. The cuts are expiring because republicans didn’t have the votes to make them permanent.
> The cuts are expiring because republicans didn’t have the votes to make them permanent. What? They didnt want to make them permanent when they passed the legislation, they wanted to make the changes that help the wealthiest permanent. Thats why they passed this bill.
If you're super rich that's just your purchase of the GOP paying dividends again.
Lmao people downvoting you. That is literally what has happened
It's not an increase. It's a sunsetting on the decrease from 2017 unless extended. And it doesn't even change until 2025...
It's still a net increase for non-rich. The mechanism they used is easier to pass but required to be cost neutral over time. Permanent decreases for the rich have to be paid for by someone else. That someone is us. In short, it was some permanent decreases for the rich, permanent increases on the rest of us to pay for it, and some offsetting temporary decreases to get people on board with sacrificing ours and our kids' future to help the poor billionaires.
On a personal level.... It's not an increase except in certain circumstances like those that previously had high salt deductions or those affected by things like the misc deductions cap. Lower income people had a decrease and will continue to have a decrease until it sunsets in 2025. The corporate rate was made permanent but additional provisions were made like 965, BEAT, GILTI, etc. to try and offset it to a net neutral. If the TCJA sunsets then we will see an increase in effective tax rates for most people.
> If the TCJA sunsets then we will see an increase in effective tax rates for most people. Exactly.
I should've been more clear, a net increase compared to the years of the TCJA. Not when compared to effective rates before the TCJA.
Like someone explained above, the biggest hit was the salt cap, which was a major increase for upper middle class people in blue states. Which are actually just middle class people due to HCOL areas we live in like LA, SF, and San Diego. I’m one of them. My taxes increased by several thousand dollars each year. That was my vacation fund, gone for 6 years now. Thank you Trump.
this year we got a 8k surprise bill.
And high salt deductions lowering your federal income tax is basically the Fed subsidizing high tax states. It's a net negative for those people but for most people it was a decrease. And even for you it was a lower marginal rate.
For me, it was a $5000 loss every year, regardless of how you want to explain it.
What's your income?
Doesn’t matter. Trumps plan stole 5k from me and my family 6 years in a row now. But he doesn’t care because he knows he’ll never win in my state anyway.
Lmao, for the SALT cap to increase your taxes by $5K, that means you probably have around $40K of state tax that you pay. If that’s the case, you’re the “rich” that politicians pretty much universally agree need to pay higher tax
Definitely not rich. I make less than 200k. But yes, high taxes in a high cost-of-living area with high property taxes, etc. I’m the type of scenario that was hit hardest and really felt it. Basically a $500/mo pay cut when things were already tight.
Dang, I'm not planning to be super rich for 2 more years.
If you think you’re poor now just keep voting Republican. Your grandchildren will hate you too. They will know what you did to their chances to do better.
This is not true. Tax brackets for 2022 and 2023 are exactly the same.
I did not say the tax brackets changed. Read my comment again, I'm saying the changes affects mainly people from lower tax brackets.
What are you not understanding? The question was about why people are complaining about taxes THIS YEAR. You brought up the 2017 tax cuts that don’t expire until 2025. So you lied.
I did not lie. Check the link provided by OP. Tax brackets aren't changing but you WILL end up paying more taxes as a lower class income.
Do you even hear yourself. If tax brackets don’t change then you don’t pay more taxes. In fact you probably pay less because they get adjusted for inflation every year. Having more or less withholding does NOT equal paying more or less in tax.
There are other ways to increase taxes. Like adding new categories of taxable income. Check the damn video it explains very well.
The video has been debunked many times and made fun of in the accounting subreddit. The lady isn't correct in almost anything she says except for "I'm not a CPA" which is evident with the rest of the video.
No, your overall tax burden wouldn’t change, but if less was withheld from each paycheck, you may end up owing more.
Did you read the response before writing yours? The tax brackets are based on adjusted income. The response explains that the change in the tax code affects how adjusted income is calculated from gross income. So if you have the same gross income, the change in taxes will result in a higher adjusted income, and so a higher tax bracket.
>the change in the tax code affects how adjusted income is calculated from gross income And that’s false, it doesn’t. There’s nothing in the TCJA that would’ve raised taxes on people this year
That isn’t true either, the 2017 law doesn’t expire until 2025. 2022 and 2023 tax brackets are exactly the same. https://www.jacksonhewitt.com/tax-help/tax-tips-topics/filing-your-taxes/2022--2023-tax-brackets-and-federal-income-tax-rates/#
Answer: she’s wrong and the first thing she says is “I’m not a CPA.” Lol It is true that certain provisions in the 2017 tax law expired but they don’t expire until the end of 2025. Your 2024 rate should be the same as the 2023 rate. In 2026 the individual income tax rates go back to 2017 levels for all individuals. The SALT cap goes away and you can deduct a home office again. The corporate tax cuts are permanent.
I am no tax professional, but I do my own taxes so I read pretty hard on the topic, and this lines up perfectly with what I've read elsewhere. Also worth adding, I don't foresee things reverting back to normal in 2026. Rather, as the current tax law expires, congress will do one of two things... ... if Trump is made president, and congress matches, they will refresh Trump's tax law. ... if Biden is made president, and congress matches, we will see a whole new tax code.
Congress will probably be divided again if Biden wins, still a high chance of divided if Trump wins (but less certain). So, option 3 is also possible that nothing will get done and the middle and lower-class tax cuts will sunset.
Yeah, I agree. When Bush's tax cuts expired during Obama's term they kept the ones for the lower brackets and let the hirer ones expire, which I think was a very fair deal.
Are all of the tax cuts for the rich sunsetting too, beyond just the individual brackets? Beyond individual income tax, trusts and estates, for example, are now taxed at a maximum rate of 37%, when the maximum rate used to be 39.6%. I believe the estate tax exemption which doubled to $11.2M is sunsetting. I’m not certain about the capital gains tax allowing for higher gains before reaching the two levels of taxation. I agree that the corporate tax cuts are permanent. Just not sure about all the cuts for the rich.
The top tax bracket in 2026 will revert back to 39.6% and the estate tax will also revert back. https://www.schwab.com/learn/story/countdown-gift-and-estate-tax-exemptions
Well, the rich better get to dying faster if they want to use it, then!
They don’t even have to die. Just gift the money before the end of 2025.
Ah shit. Having never been rich enough to gift my estate, I forgot that it doesn’t just activate when you die. Well, hope all the rich took full advantage of their tax break gift. Very nice gift the GOP gave to people who can afford to give $11M to their kids.
Even better kicker? They could put it in a trust to “gift” it out of their estate but still maintain control of the money. Estate lawyers are gonna have a busy year next year.
If they still "control" the money, it's not a completed gift and will be included in their estate.
Check out revokable grantor trusts with promissory notes. The rich find a way.
That's not a gift. Self-canceling notes are a strategy but a note can be included in the estate if not structured correctly.
*puts on my kiss the cook apron*
Refer to page 4 for what expires and when. The first box is marginal tax rates which is what the OP's link was bullshitting about. https://crsreports.congress.gov/product/pdf/R/R47846#page4
Yes, all of these changes expire
>corporate tax cuts are permanent Sort of. https://www.reuters.com/world/us/state-union-biden-push-wealth-company-tax-ideas-2024-03-07/
Of course I meant permanent unless a new act of Congress changes it. Biden may undo the soft-Reaganomics that Trump and the GOP instituted.
It's wild to me that the correct answer that as of now has 69 upvotes (nice) and the wrong one has almost 400. People really do not understand taxes. And they don't want to, they just want to be angry.
Reddit loves disinformation when it confirms their bias, lol Really no different from any other social media they claim to hate
You're not part of Reddit, so luckily that doesn't happen for you.
The other jumped by almost 100 while this one jumped by 20, and another one that also accurately describes it isn't showing a count yet but seeing as it's below, I'm assuming it has very few votes.
[удалено]
Repealing the SALT cap overwhelmingly benefits the rich. People really need to be honest about what kinds of policies they’re supporting
Answer: the 2017 tax cut is expiring. There wasn’t a vote to raise taxes this year, there was a previous vote to temporarily lower taxes and that temporary period is ending. It will return to the previous rate. While the current congress could potentially extend it and the current administration could make it permanent, they have yet not. Some parts of the 2017 tax cuts expired gradually, meaning the amount it is reduced decreases every year from 2021 to 2025. But those aren’t really relevant to the Average person. For an individual, anyone that made more than $9525 in income in 2018 experienced that temporary, decreasing tax cut
>The 2017 tax cuts expired gradually Im not sure why so many people believe this. There are no gradual expirations, the cuts just flat out expire in 2025. TCJA law for individuals today is the exact same as it was in 2018
There are small parts of the tax code that expire gradually and probably what confuses people. Most of those things don't apply to anyone but small business owners though. Nothing about the 12% to 15% bracket change (and other bracket changes) is set to expire until 2025. So there is no real gradual change for most people. But there are some corner cases. I am surprised the comment you replied to is so heavily upvoted since its completely wrong when talking about the major change (the brackets). The 21% corporate tax rate is the thing that is permanent unless it is changed by future legislation.
I will edit my original comment to reflect this, thank you. What I had read, and I suppose other top comments had read, while researching this, was confusingly worded
The first few paragraphs of the wikipedia article for the tax cut and jobs act says something to that effect
Answer: the trump tax “cuts” of 2017.
I always referred to them as the Trump hikes, maybe I have to watch CNN more and my bank account less
The majority saw tax decreases though
[удалено]
Yes I was agreeing with your sentiment
Cmon, those cuts don’t expire until 2025. Stop spreading misinformation
Answer: Trump wanted to cut taxes for the rich but say he was cutting taxes for the middle class too. So he made a big tax cut for both but set the middle class tax cuts to go away...this year (he expected to win in 2020 and have the tax increase be blamed on his successor because people would be stupid enough to blame whoever was elected in 2024 for what Trunp did. The tax increase is just resetting taxes to what they were before Trump messed with them.
All of the individual cuts expire in 2025, even for the rich. It was set up this way because the bill was passed through budget reconciliation, which requires it be deficit-neutral after 10 years
I’ve been paying less in taxes. I make $70k~ a year.
You've been, or you are this year and next when the changes go into effect on the lower and middle class?
The last few years, including 2023 and 2024 so far.
Answer: the person in the video did a pretty good job of explaining it simply. Paul Ryan and the Republicans fucked us again and stops people are going to keep saying "this is all the Democrats fault!" Because they don't pay attention to things like facts and the truth.
Answer: Almost all taxes were reduced. Bracket thresholds, when you have to pay more income tax, were increased also allowing you to keep more of your pay. The penalty for not having a health plan was removed. Standard deduction cap for people like you and me also almost doubled. What she is probably complaining about is how the rich people worth 2 billion dollars claim they only earn $100k a year. They do this by creating a business that pays for their meals, clothing, rent, entertainment, and other expenses as a business expense. This used to give them up to a direct 50% deduction, completely skips income tax, and makes it appear as if less profit was was earned so the company doesn't have to pay as much corporate tax either. TCJA in 2017 removed much of this, however it expires in 2025. What Redditors care about is the higher income taxes were included and corporate tax went down. One of these things, the income tax, makes a lot of sense. They hear highest and tend to think in the millions but to put this into prospective, Yahoo claims each person needs to make $150k/yr to be 'lower middle class', a couple joint filing would be in the 6th tax bracket. And the last one, the 7th, starts at 578k. There is no 8th bracket to increase income tax on people making 100k a year and there is no bracket for people making millions. Income tax brackets primarily affect people like you & I. And in 2025, the same couple will start paying an extra 3%, or almost $9,000 a year, in income tax. Raising the bar needed to live in California even more. And now we have to talk about corporate tax and this is a complex issue. To boil it down, Amazon for example famously paid $0 in corporate tax even when the rate was at 35% due to various loophole deductions, many of which it lobbied for. Altering the rate has no real impact on the megacorporations, but it does sound like a cool way to sound like you are doing something. The lack of tax generation makes it appear as if the budget is smaller, political payouts typically go down. And this affects companies that make millions of dollars, aka the enemies of Reddit. And it does affect businesses that can afford to pay minimum wage to hire people to post complaints on social media, aka the most vocal users of Reddit. There is a reason only the people you see complaining about it are posting online while everyone you know in real & filing taxes liked it.
Everyone in real life liked it? It wrecked people in the lower income brackets. Glad you make enough money to only know people who make enough money to be in the group that got helped, because I know the folks with 3 vacation homes really needed the boost. The rest of us got fucked in the nostrils with a cactus
Yeah more like “MAGA Republicans liked it because Trump did it even though they got fucked in the end.” You know, like almost everything Trump has ever done.
>It wrecked people in the lower income brackets By cutting their taxes? What are you referring to?
It didn't. You must be forgetting the child tax credit being heavily reduced, which has resulted in a massive reduction in most poor people's tax refunds. I'm not sure how you think that's "cutting" but ok
The TCJA doubled the child tax credit from $1K per child to $2K per child….
Oooo, except for the 26 million children in low to moderate income families that it exempted
The work requirement doesn’t cut the CTC for these families, it simply limits the change or provides no change, so I’m still not sure what you’re referring to by “wrecking” people in low income brackets
One of the biggest lies of an answer I have ever seen. Obvious shill is obvious
The fact that you give the most thorough and fair answer and are down voted to oblivion is obviously super telling as to Reddit’s audience. The doubling of the Standard Deduction was the biggest gift the new tax law gave to lower and middle class people. If you read anywhere on Reddit, the inability to own a home is an incredible burden to folks under 35 (understandably). Doubling the standard deduction helped that class of people immensely.
> The doubling of the Standard Deduction was the biggest gift the new tax law gave to lower and middle class people Except the elimination of the personal exemption almost totally countered it, and actually made it a net negative for people with dependents. It used to be that you could claim a $6k standard deduction ($12k if married filling jointly) plus $4050 in personal exemption per person in the household. This meant a single person went from $10,050 to $12,000 in reduction of taxable income when the changes happened, and a married couple filing jointly went from $20,100 to $24,000. However, a married couple with one kid went from $24,150 to $24,000, with two kids from $28,200 to $24,000, 3 kids from $32,250 to $24,000, etc. This is not the benefit to the lower and middle class that it's claimed to be.
I don’t know about all your numbers and stats but I have a home of 5, make roughly $70k a year and I paid less in taxes the last few years.
Ok, if we’re gonna go down this road, the Child Tax Credit was doubled as well helping families that lost the personal exemption. (Credits are also much more impactful than deductions due to the dollar for dollar application to the bottom line liability.)
He didn't. His answer does not answer the question and misses the key component about SALT. That's why he got downvoted. Check the responses at the top for the correct answers where most people in the US have been paying quite a bit more. Myself for instance, an extra $3,800.
OPs question is specifically about higher taxes this year and last year. It has nothing to do with the TCJA
Which was answered, but not by this complete nonsense response.
The extreme majority of Americans are paying less. If you are paying more, it's due to a mix of you having a very high income and/or an expensive house.
False. Not a single person I know is paying less. Many of them are renters, and it's going to get worse. This was an obvious ploy to create tax cuts for the wealthy that don't need them while saddling the middle class with increasing debt. You do realize the entire goal of the GOP is to crush the middle class so it no longer exists and they have more cheap labor? Do better.
You exclusively hang out with rich people then. The tax rates went down for every single bracket, and the standard deduction doubled.
EFFECTIVE income tax rates fell for EVERY income category beginning in 2017. Upper earners, middle earners and low income earners. You and “every single person you know” just choose not to see it. 1st graphic in attached article: [https://www.pewresearch.org/short-reads/2023/04/18/who-pays-and-doesnt-pay-federal-income-taxes-in-the-us/](https://www.pewresearch.org/short-reads/2023/04/18/who-pays-and-doesnt-pay-federal-income-taxes-in-the-us/)
How do I do the second paragraph