Anonymous wrote:

Anonymous wrote:NY CA NJ people: prepay your 2026 prop taxes now before the new year. You’re welcome.

Also, prepay college tuition in December for the spring semester.

Is this just for NY CA and NJ? How does prepaying help?

Anonymous wrote:

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

Ah yes, the DCUM “middle class”.

That sucks. I was getting excited that we’d pay less in taxes.

Folks on DCUM are are too young to remember bur in 70s the peak Federal rate was around 72 percent on high earners. once you reached a certain income limit. Even crazier in NYC the combined NYC/NYS tax burden was around 18 percent at peak so a rich NYC person on upper income could be taxed at 100 percent.

My town in the 1970s all the Country Clubs near me Wed became a very busy day. Doctors and such realized that 5 day of work was almost 100 percent taxed so why work five days week just work four days.

Country Clubs and Pool clubs were filled with wives and children during week as made zero sense for the women to work if husband was a high earner. My very rich uncle on Long Island his wife who was not much of a homemaker wanted to go back to work when kids a bit older. My young at time was in the 80 percent tax bracket, she got a job paying around $8,000 a year in 1973 and since joint return paid 80 percent taxes on that $8,000 and only took home $1,600 a year!!

Then to add to madness some rich women had Boutiques stores, horse riding places, flower shops that all lost money and was more of a hobby whose point was to generate losses. It would pull some of husbands income out of the high tax bracket.

We even had stuff where people create limited liablity partnerships or buy money losing businesses to generate losses.

Heck my Dentist was a "landlord" of several dumpy buildigns in Queens with rent controled tenants that lost money but brought his income down, He did very well as saved him taxes and when retired tax rates fell and sold buildings for a good gain in the long terrm capital gains bracket.

The high taxes on rich just encourage people to work less and do things to create paper losses to pay less taxes. Better how it is today.

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Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

And if you itemize. I wonder how many people: 1) have state tax deductions over $10k, 2) make under $600k MAGI, and 3) itemize. In many states, if you itemize federal then you have to itemize state too, and if you're only substantial itemized deduction is state taxes, then you'll get no deduction at all at state level (since state taxes are not deductible on state taxes). That seems like a pretty small universe.

Odds are you're itemizing if you're paying mortgage interest, no? Between SALT and interest, that's enough to get us over the standard deduction even before we take charitable donations into account. Especially now that the SALT cap is significantly higher than the standard deduction amount.

Before the SALT cap was introduced in 2017, 80% of households making between $100-500K were itemizing. After the cap was set at 10K only 22.5% itemized. Raising the cap again is going make a huge difference, especially in this area.

The standard deduction was also doubled in 2018, so that definitely had an impact. A lot more people in HCOL areas will itemize now, people in LCOL places will still have a hard time hitting $30K+ in itemized deductions.

Yep. The standard deduction for a couple is $31,500 this year. Even with state taxes, it will be hard for most people to get over that in itemized deductions even with the increased limits. I’d imagine this will only really help folks in the $400-$500k range.

Not all homeowners are filing jointly. I make $200k and was easily hitting the itemization level even with the cap. My property taxes alone are $10k, and I don’t even own a particularly expensive home for my area.

The fact that the threshold and phase-out are the same for single and MFJ is an odd quirk of this new rule. If DH and I were not married, we could deduct $80k in state taxes, but because we are, we can only deduct $10k. We already had a marriage penalty, but this makes it really big. I bet we could save over $30k in taxes by divorcing.

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

Ah yes, the DCUM “middle class”.

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Anonymous wrote:

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

What public goods do you refer to? I don't use the schools, roads, police, fire, trash, military, agriculture, etc any more than a person making less than me does.

Anonymous wrote:New thought: for those of us over 50 with catch-up TSP contributions, if those start going to Roth in 2026, will that increase our taxable income, potentially impacting the SALT/tax analysis?

That's a good point. 401K catch-up contributions starting in 2026 have to be contributed to a Roth 401K and thus will not be deductible on your income. If you were close to the $500K SALT threshold before that extra taxable income will now start decreasing your SALT deduction. Also it may kick you into a higher income tax bracket and capital gains bracket. And if you're on Medicare, it may bump you into a higher IRMAA bracket in 2 years. Lots to think about.

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Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

And if you itemize. I wonder how many people: 1) have state tax deductions over $10k, 2) make under $600k MAGI, and 3) itemize. In many states, if you itemize federal then you have to itemize state too, and if you're only substantial itemized deduction is state taxes, then you'll get no deduction at all at state level (since state taxes are not deductible on state taxes). That seems like a pretty small universe.

Odds are you're itemizing if you're paying mortgage interest, no? Between SALT and interest, that's enough to get us over the standard deduction even before we take charitable donations into account. Especially now that the SALT cap is significantly higher than the standard deduction amount.

Before the SALT cap was introduced in 2017, 80% of households making between $100-500K were itemizing. After the cap was set at 10K only 22.5% itemized. Raising the cap again is going make a huge difference, especially in this area.

The standard deduction was also doubled in 2018, so that definitely had an impact. A lot more people in HCOL areas will itemize now, people in LCOL places will still have a hard time hitting $30K+ in itemized deductions.

Yep. The standard deduction for a couple is $31,500 this year. Even with state taxes, it will be hard for most people to get over that in itemized deductions even with the increased limits. I’d imagine this will only really help folks in the $400-$500k range.

This. Idk who this is actually helping aside from the narrow $400-500K range who is overextended with their mortgage.

We’re at $700K HHI in VA (and own a house with a $700K mortgage give or take) and don’t get over the threshold where it makes sense to itemize - the standard deduction is still larger for us. Plus SALT phases out starting at $600K anyways back down to $10K.

This doesn’t make sense to me. We also have a $700k-ish mortgage, and even with a sub 4% interest rate, our mortgage interest is ~$18k/year, a few years in. Plus $8k+ in property taxes. Plus 5.75% va income tax (on a $400k salary, this is still $15k+/year). Plus car tax. Plus charitable deductions.

We’re not overextended at all - PITI is about 12% of gross income - but this will reduce our taxes by a bit.

We're a couple living in VA. The previous $10K SALT cap had us taking the standard deduction as well. But with the new $40K SALT cap, we'll be itemizing. Property tax is $18K, personal property taxes are $1K, and state income taxes are $25K. Fortunately our MAGI is just below the $500K phase out threshold. Glad they don't include Roth IRA income in this calculation or we would be capped at $10K.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:2 problems moving to FL or TX:

1. You actually have to live there, which for most normal people is barf, and
2. Have you seen real estate taxes?? You get re-assessed both places upon sale and the rates are INSANE. Sure from NY or NJ it makes sense but not really from VA.

FYA FL is likely getting rid of property taxes this legislative session - I’ll believe it when I see it but there’s a big organized push

Hm, what can go wrong. No property or income tax. How do you support public education from K to college? How do you support public safety and health care, the basics. I'm curious where the money comes from.

I was wondering the same thing. But FL tourist type taxes are huge. Ever rent a car in Orlando? The taxes almost double the cost of the rental. All the extra hotel taxes are significant as well. Perhaps FL is going the way of Hawaii and increasing the costs for tourists to visit.

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Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

I don't think you sell taxation by justifying it by claiming people who have more money disproportionately benefitted from public goods. It doesn't work that way. In fact, public goods are mostly designed to benefit the public at large. And if public goods disproportionately benefit the wealthy, doesn't that make them by definition biased?

The argument is that the wealthy were only able to get that way due to government spending that provided the stability (and infrastructure/basic research) for capitalism to flourish.

How does that justify progressive taxation? We tax progressively because poor people don't have any money, not because people who have higher incomes benefitted disproportionately from the system of public goods.

Really it's a mixture of both, but yeah, the main reason is because when you're wealthy living on the remainder after 30%+ in taxes is taken away is incredibly easy because you still have an enormous amount left over while if you're poor having 20% taken out can mean the difference between being able to afford to eat or not.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:With SALT deduction in 2025, that would push us to itemize, and would give us the full benefit of charitable deductions right? (Unlike in 2026, when there are more limitations on charitable deductions.) Trying to get a handle on the full scale of the tax savings.

The limits are pretty loose — you can't deduct the first .05% of your charitable donations. For my family, that knocks off about $200 in deductible donations, but we typically deduct more than $10,000 a year in charitable giving, so I don't really intend to change anything because of that tax change.

Sorry, that's not right — typo. It's first .5%, and we lose about $2,000 in deductible donations. Still not planning to give less.

That’s not right. The limit isn’t the first 0.5% of the deduction, it’s 0.5% of your AGI. So if your AGI is $400k, you lose $2k in deductions.

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Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

I don't think you sell taxation by justifying it by claiming people who have more money disproportionately benefitted from public goods. It doesn't work that way. In fact, public goods are mostly designed to benefit the public at large. And if public goods disproportionately benefit the wealthy, doesn't that make them by definition biased?

The argument is that the wealthy were only able to get that way due to government spending that provided the stability (and infrastructure/basic research) for capitalism to flourish.

How does that justify progressive taxation? We tax progressively because poor people don't have any money, not because people who have higher incomes benefitted disproportionately from the system of public goods.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

I don't think you sell taxation by justifying it by claiming people who have more money disproportionately benefitted from public goods. It doesn't work that way. In fact, public goods are mostly designed to benefit the public at large. And if public goods disproportionately benefit the wealthy, doesn't that make them by definition biased?

The argument is that the wealthy were only able to get that way due to government spending that provided the stability (and infrastructure/basic research) for capitalism to flourish.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

I don't think you sell taxation by justifying it by claiming people who have more money disproportionately benefitted from public goods. It doesn't work that way. In fact, public goods are mostly designed to benefit the public at large. And if public goods disproportionately benefit the wealthy, doesn't that make them by definition biased?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:if your MAGI is under $500,000. Phases down to $10,000 if MAGI is over $600,000

As it should

Why “as it should”? Why should I be punished for my financial acumen and success?

You aren’t being “punished.” Change your framing.

Enlighten me. The government is taking more from me because I make more despite the epic amount of wasteful govt spending. That seems like punishment to me.

Then you have a puerile understanding of how things work.

Our income tax is progressive. You pay more because you have the ability to pay more and have also disproportionately benefited from the public goods that facilitated your income and wealth. It isn’t “punishment.” On the contrary.

I agree with progressive taxation, because I don't know how else we could reasonably fund our society. But I'm a little annoyed at the constant "disproportionately benefited" trope. Are those who pay less or even no income taxes not significantly benefited by "the public goods" paid for by others taxation?