Do you see a meaningful change in your income with new Tax Bill?
Do you see a meaningful change in your income with new Tax Bill?
(Now that its signed I'm guessing we've got permission to talk outside one official thread...)
Anyway, I couldn't find a good calculator out there for year-to-year comparisons but it seems to me I'll benefit to the tune of some lunch money.
I'm losing $60k+ in SALT deductions and gaining in reduced rates, but I just retired this year with large 2017 income and I'm headed into the world of managed income, so I haven't done a good comparison between the current and 2018 tax plans.
How about you?
Anyway, I couldn't find a good calculator out there for year-to-year comparisons but it seems to me I'll benefit to the tune of some lunch money.
I'm losing $60k+ in SALT deductions and gaining in reduced rates, but I just retired this year with large 2017 income and I'm headed into the world of managed income, so I haven't done a good comparison between the current and 2018 tax plans.
How about you?
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.
Re: Do you see a meaningful change in your income with new Tax Bill?
My income won't change. I won't be working any more nor any less and neither will my spouse.
And we have already been doing the following for years:
1. DAF
2. Bunching deductions
3. No mortgage interest
What will change is that our youngest should not be a dependent anymore and we will get less tax credits, but that was going to happen regardless of any tax law changes.
And we have already been doing the following for years:
1. DAF
2. Bunching deductions
3. No mortgage interest
What will change is that our youngest should not be a dependent anymore and we will get less tax credits, but that was going to happen regardless of any tax law changes.
Last edited by livesoft on Fri Dec 22, 2017 10:24 am, edited 3 times in total.
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Re: Do you see a meaningful change in your income with new Tax Bill?
Income stays the same. Next years taxes look like a wash based on what I know now.
Re: Do you see a meaningful change in your income with new Tax Bill?
We’ll see an increase of about $3200 in after tax income. We presently take the standard deduction.
We are looking to purchase a home and if I do a pro forma on the type of house we’ve budgeted for with the old vs new plan, the new tax plan will cost us $2000 once you account for the removal of SALT and mortgage interest (i.e. not itemizing).
Not ideal, but I’d rather have it this way vs. already owning the home and having $2000 taken out of my pocket.
We are looking to purchase a home and if I do a pro forma on the type of house we’ve budgeted for with the old vs new plan, the new tax plan will cost us $2000 once you account for the removal of SALT and mortgage interest (i.e. not itemizing).
Not ideal, but I’d rather have it this way vs. already owning the home and having $2000 taken out of my pocket.
Last edited by Jags4186 on Fri Dec 22, 2017 10:30 am, edited 1 time in total.
Re: Do you see a meaningful change in your income with new Tax Bill?
Not really.
"..the cavalry ain't comin' kid, you're on your own..."
Re: Do you see a meaningful change in your income with new Tax Bill?
We'll see what actually happens. I've tried a number of the calculators out there and most put us at +$4-6k. Married, 3 kids, high tax state. Previously itemized.
- SmileyFace
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Re: Do you see a meaningful change in your income with new Tax Bill?
Try this:
http://taxplancalculator.com/
Missing AMT and some corner cases - but if your taxes aren't too complex its a nice compare
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Re: Do you see a meaningful change in your income with new Tax Bill?
I don't care. I will just buy a tax software and I believe it will sort everything out.
- Chief_Engineer
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Re: Do you see a meaningful change in your income with new Tax Bill?
We will see about a 5% increase in take-home pay than we would have under the old tax law. This is mostly due to the increased phase-out threshold for the child tax credit and lower tax brackets.
We live in a low tax state and rent, so we would've claimed the standard deduction no matter what. Our taxes are simple so I was able to do the calculations myself.
We live in a low tax state and rent, so we would've claimed the standard deduction no matter what. Our taxes are simple so I was able to do the calculations myself.
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Re: Do you see a meaningful change in your income with new Tax Bill?
Based on http://taxplancalculator.com/ it looks like we'll be up 3 or 4 grand.
- TomatoTomahto
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Re: Do you see a meaningful change in your income with new Tax Bill?
I hope so. Our CPA estimated that we'd be paying more in taxes. The web site estimated we'd save $28k. I hope that the web site is rightDaftInvestor wrote: ↑Fri Dec 22, 2017 10:29 amTry this:
http://taxplancalculator.com/
Missing AMT and some corner cases - but if your taxes aren't too complex its a nice compare
Fwiw, we don't have mortgage interest, our charitable contributions are modest, and our deductions have been mostly property tax and state taxes. It is difficult to see how we don't get more hammered by the new law, but time will tell.
I get the FI part but not the RE part of FIRE.
Re: Do you see a meaningful change in your income with new Tax Bill?
Unless I shift from national munis to state specific I don't see how my income would change (other than factors outside my control). Not likely to do that. The national ones are more diversified and every time I look at the state funds, the rate difference implies that the advantage has been eaten up by arbs.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Do you see a meaningful change in your income with new Tax Bill?
Increased standard deduction less loss of exemptions will net a little bit after tax as long as it lasts.
If it really happens that tax change drives stock market up more than otherwise would have happened most investors here will benefit.
If the question is really about income, the question is whether this tax bill will in fact result in an economic boost to jobs and income.
If it really happens that tax change drives stock market up more than otherwise would have happened most investors here will benefit.
If the question is really about income, the question is whether this tax bill will in fact result in an economic boost to jobs and income.
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Re: Do you see a meaningful change in your income with new Tax Bill?
It looks like I'll save between 2 and 4 thousand, which isn't very interesting to me. (It's also very hard to estimate with AMT, capital gains, qualifed dividends, and so on) But what is interesting is that it looks like my marginal tax rate is going from 33% to 24%, which creates some new situations like:
- Muni bonds may no longer provide any advantage over taxable bonds.
- Makes roth 401ks look better than before.
I also lose my charitable deduction, so just did a DAF for 5 years of giving.
- Muni bonds may no longer provide any advantage over taxable bonds.
- Makes roth 401ks look better than before.
I also lose my charitable deduction, so just did a DAF for 5 years of giving.
Last edited by jdilla1107 on Fri Dec 22, 2017 2:02 pm, edited 3 times in total.
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Re: Do you see a meaningful change in your income with new Tax Bill?
My estimate of our federal tax savings is roughly $2,400.
We're MFJ with one baby and have taken the standard deduction since getting married. We lose the three exemptions, but we gain a bigger standard deduction, a bigger child tax credit and a slightly lower marginal tax rate.
We're MFJ with one baby and have taken the standard deduction since getting married. We lose the three exemptions, but we gain a bigger standard deduction, a bigger child tax credit and a slightly lower marginal tax rate.
- SmileyFace
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Re: Do you see a meaningful change in your income with new Tax Bill?
What reason did your CPA give for paying more? It likely depends upon how high your property tax and state taxes are whether or not the doubling of the standard deduction along with the marginal tax rate decreases will benefit you or not.TomatoTomahto wrote: ↑Fri Dec 22, 2017 10:36 amI hope so. Our CPA estimated that we'd be paying more in taxes. The web site estimated we'd save $28k. I hope that the web site is rightDaftInvestor wrote: ↑Fri Dec 22, 2017 10:29 amTry this:
http://taxplancalculator.com/
Missing AMT and some corner cases - but if your taxes aren't too complex its a nice compare
Fwiw, we don't have mortgage interest, our charitable contributions are modest, and our deductions have been mostly property tax and state taxes. It is difficult to see how we don't get more hammered by the new law, but time will tell.
I wonder if this will impact populations in high-tax states in the coming years.
Re: Do you see a meaningful change in your income with new Tax Bill?
My estimate is that I’ll get around $3000. I’ll go Roth from this year until it expire (if it does).
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Re: Do you see a meaningful change in your income with new Tax Bill?
It’s a wash for us. But our kids timed it right regards to when to leave the nest. This is the last year we can claim them anyway. I’m also glad we had our last large foreign tax credit this year. So our timing can’t be beaten.
But I originally had planned to convert larger Roth amount, now I just scale back and wait and see for clearer instructions from the IRS. But hopefully the rise in equities is more than make up for the tax loss. We don’t do Roth recharacterization, so it’s not a big deal on that front either. Less headaches in playing games to maximize our returns.
But I originally had planned to convert larger Roth amount, now I just scale back and wait and see for clearer instructions from the IRS. But hopefully the rise in equities is more than make up for the tax loss. We don’t do Roth recharacterization, so it’s not a big deal on that front either. Less headaches in playing games to maximize our returns.
Last edited by DrGoogle2017 on Fri Dec 22, 2017 11:22 am, edited 2 times in total.
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Re: Do you see a meaningful change in your income with new Tax Bill?
While the new tax estimates at this point seem pretty robust for many people; I expect that the greatest unpredictable piece of financial planning will show up in volatile health insurance costs. From a strictly financial standpoint, I fully expect that changes in health insurance costs will continue to completely overwhelm any changes in my tax status going forward.
Re: Do you see a meaningful change in your income with new Tax Bill?
I would save a few thousand in federal tax because of the change in the tax brackets. I have been in the 25% marginal tax bracket for a few years and now will probably be in the 22% bracket instead. I haven't itemized in many years and for 2017 I used QCDs for charitable giving.
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Re: Do you see a meaningful change in your income with new Tax Bill?
I put a good guess of 2018 income numbers through the previous tax code for 2018 and the new one. Since we paid off our house this year, it wouldn't make sense to compare to 2017 or previous years. The new tax code increases our income by about $3200. We already spend less than half of our after tax income, so no real impact to our lives.
Re: Do you see a meaningful change in your income with new Tax Bill?
No, not meaningful.
We've claimed standard deduction for a few years now, so we get a bit of benefit from the slight increase provided by the new deduction amount (compared to the previous deduction plus exemption amount), and the slightly lower tax rate. Its way less than, say, a decent raise.
We've claimed standard deduction for a few years now, so we get a bit of benefit from the slight increase provided by the new deduction amount (compared to the previous deduction plus exemption amount), and the slightly lower tax rate. Its way less than, say, a decent raise.
Re: Do you see a meaningful change in your income with new Tax Bill?
No, no income changes beyond raises in March.
With SALT/RE cap we'd hit only $8K in deductions (mortgage & RE taxes are comparatively low for NYC) + charity.
SALT, mortgage interest & re taxes hit $23K + $8,100 in exemptions (2 people) + charity which fluctuates (more due to hurricanes this year).
With SALT/RE cap we'd hit only $8K in deductions (mortgage & RE taxes are comparatively low for NYC) + charity.
SALT, mortgage interest & re taxes hit $23K + $8,100 in exemptions (2 people) + charity which fluctuates (more due to hurricanes this year).
Re: Do you see a meaningful change in your income with new Tax Bill?
Taxpayers who've been in the AMT couldn't get personal exemptions or state and local taxes. Many of them will no longer be in the AMT, and will now get $10,000 of state and local taxes.
The joint return brackets will be twice the width of the single brackets through the 24% bracket (up to $315,000 joint). That will let more married IRA owners do Roth conversions at 24% or less.
The estate and gift tax exclusion amount and the GST exemption will be doubled for 2018 through 2025. High net worth taxpayers will be able to give an additional $5.6 million ($11.2 million) free of transfer tax while this window is open. While this won't affect very many taxpayers, it will provide a substantial benefit for those whom it affects.
The joint return brackets will be twice the width of the single brackets through the 24% bracket (up to $315,000 joint). That will let more married IRA owners do Roth conversions at 24% or less.
The estate and gift tax exclusion amount and the GST exemption will be doubled for 2018 through 2025. High net worth taxpayers will be able to give an additional $5.6 million ($11.2 million) free of transfer tax while this window is open. While this won't affect very many taxpayers, it will provide a substantial benefit for those whom it affects.
Re: Do you see a meaningful change in your income with new Tax Bill?
From a tax perspective, we expect to see a $18K decrease in our federal taxes. Depending on AMT and some other things, it could be as low as $10K, but it's very significant.
The calculator above shows $13,850 reduction for us. But using some other calculators with more specificity I came up to closer to $18K. I don't think either is taking AMT correctly nor is the first one accurately reflecting my state taxes and thus their deduction for 2016, so that probably reduces both a little.
I'll call it ~$15K and be pretty darn excited.
It also means that because of a lower bonus in 2018, our AGI will fall below $335K, which keeps us in the 24% marginal bracket. Therefore I cancelled our NQ deferred income election for 2018, further increasing our take home pay.
Overall I expect my take-home pay to increase by ~$20K despite gross pay decreasing by about ~$40K
The calculator above shows $13,850 reduction for us. But using some other calculators with more specificity I came up to closer to $18K. I don't think either is taking AMT correctly nor is the first one accurately reflecting my state taxes and thus their deduction for 2016, so that probably reduces both a little.
I'll call it ~$15K and be pretty darn excited.
It also means that because of a lower bonus in 2018, our AGI will fall below $335K, which keeps us in the 24% marginal bracket. Therefore I cancelled our NQ deferred income election for 2018, further increasing our take home pay.
Overall I expect my take-home pay to increase by ~$20K despite gross pay decreasing by about ~$40K
Last edited by Bacchus01 on Fri Dec 22, 2017 11:12 am, edited 3 times in total.
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Re: Do you see a meaningful change in your income with new Tax Bill?
Yep. We should save about $3500 in federal taxes (using this years numbers). That's a decent amount for us!
Re: Do you see a meaningful change in your income with new Tax Bill?
All the puts and takes show my net tax/credits are $2,400 better than under the previous rates. We have a pretty simple 'accumulation phase' MFJ situation with 2 kiddos and benefit from the higher child credit as well as it not getting phased out at our income level.
I'm sure I will do something like save the difference, just like any other pay increase or found money. Boring!
I'm sure I will do something like save the difference, just like any other pay increase or found money. Boring!
Re: Do you see a meaningful change in your income with new Tax Bill?
Thanks for the calculator link. Looks like we'll save about $850.
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Re: Do you see a meaningful change in your income with new Tax Bill?
We are going to save a substantial amount. Very excited for the next 10 years (hopefully the cuts will become permanent)!
Re: Do you see a meaningful change in your income with new Tax Bill?
Definite significant reduction in tax liability. About $3600-$4200!!!
- flamesabers
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Re: Do you see a meaningful change in your income with new Tax Bill?
It looks like I'll be saving a few hundred in taxes for 2018.
Re: Do you see a meaningful change in your income with new Tax Bill?
Looks like we will save around $500 next year -- so I'll probably aim to keep our witholdings unchanged.
Capped SALT deductions really hurts us, but the other benefits seem to make up the difference in our case. Will be switching to standard deduction and using the beefed up child tax credit (1 kid). I'm not thrilled with the bill because of the SALT cap really brings down the value for us (and we just moved to a house/state with very high property taxes and state taxes), but overall my taxes aren't going up so I guess I shouldn't really complain.
Capped SALT deductions really hurts us, but the other benefits seem to make up the difference in our case. Will be switching to standard deduction and using the beefed up child tax credit (1 kid). I'm not thrilled with the bill because of the SALT cap really brings down the value for us (and we just moved to a house/state with very high property taxes and state taxes), but overall my taxes aren't going up so I guess I shouldn't really complain.
Re: Do you see a meaningful change in your income with new Tax Bill?
Retired, no debt, 90% of investments are in taxable accounts, take the standard deduction. A slight increase, maybe.
- ClevrChico
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Re: Do you see a meaningful change in your income with new Tax Bill?
Yes. The online calculator reported we'd pay $7k less in federal taxes. (Higher standard deduction + lower bracket + child tax credit changes.)
I have to say, that is unexpected. I guess we're more in the sweet spot than others for being able to take advantage.
There is speculation about big stock market gains due to the changes, which could could be the biggest benefit to investors with the tax change.
I have to say, that is unexpected. I guess we're more in the sweet spot than others for being able to take advantage.
There is speculation about big stock market gains due to the changes, which could could be the biggest benefit to investors with the tax change.
Re: Do you see a meaningful change in your income with new Tax Bill?
I'll save about 2k.
Re: Do you see a meaningful change in your income with new Tax Bill?
I'm estimating about a $12k reduction in federal taxes for 2018. This is due to eliminating the AMT and the much higher CTC income phaseouts, with everything else coming out as a wash. I don't know what the state income tax will be, but overall, it is meaningful.
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Re: Do you see a meaningful change in your income with new Tax Bill?
At a glance, the income taxes we would pay goes down by about 20%. Half of that savings is from now being able to use the child tax credit.
Re: Do you see a meaningful change in your income with new Tax Bill?
We’ll save about$3K. Beats a poke in the eye.
We have two grown kids, one in the sweet spot (Louisiana) and the other in the bullseye (California)
We have two grown kids, one in the sweet spot (Louisiana) and the other in the bullseye (California)
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Re: Do you see a meaningful change in your income with new Tax Bill?
Not sure what to believe.
When I use the 2 calculators they indicate I will pay ~$2-6k less tax under the new plan.
https://www.frugalprofessor.com/model-o ... ompromise/
http://taxplancalculator.com/
How is that so with my Schedule A averaging $100k per year for me - including $60k SALT and $16k property tax that will be wiped out.
I understand my top bracket is now 37% - I guess that more than offsets the loss of $66k of SALT deduction?
When I use the 2 calculators they indicate I will pay ~$2-6k less tax under the new plan.
https://www.frugalprofessor.com/model-o ... ompromise/
http://taxplancalculator.com/
How is that so with my Schedule A averaging $100k per year for me - including $60k SALT and $16k property tax that will be wiped out.
I understand my top bracket is now 37% - I guess that more than offsets the loss of $66k of SALT deduction?
Re: Do you see a meaningful change in your income with new Tax Bill?
I have a lot of deductions (high tax state, big mortgage at the start of a 30 year term) and the value of those will decrease with capped SALT deduction, but I'll get credits for my two kids (previously was just barely over income). Net benefit of $2,000.
Re: Do you see a meaningful change in your income with new Tax Bill?
Our schedule A is not that high, closer to $55K with $39K being SALT.arsenalfan wrote: ↑Fri Dec 22, 2017 11:31 am Not sure what to believe.
When I use the 2 calculators they indicate I will pay ~$2-6k less tax under the new plan.
https://www.frugalprofessor.com/model-o ... ompromise/
http://taxplancalculator.com/
How is that so with my Schedule A averaging $100k per year for me - including $60k SALT and $16k property tax that will be wiped out.
I understand my top bracket is now 37% - I guess that more than offsets the loss of $66k of SALT deduction?
I’ve run it through several calculators as well as done a number of hand calculations. We are going to save about $13K. The wider low marginal bands, the CTC which we get now and didn’t get before, and the AMT impact is huge.
Re: Do you see a meaningful change in your income with new Tax Bill?
I made a second tax projection spreadsheet for next year using old tax law and new tax law. Our base pay will save approximately $4300... $4k of which is being able to claim the CTC. I also did a separate calculation to add in potential bonuses and nominal pay increases next year. The gap increases by 8.5% of the additional income, which is the difference between the old AMT rate of 32.5% and the new 24% bracket.
We won't be itemizing anymore.
We won't be itemizing anymore.
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Re: Do you see a meaningful change in your income with new Tax Bill?
I'd save $22K per year according to the calculator. I'm in the top 0.5% in income and live in a no state income tax state.
Last edited by investing1012 on Fri Dec 22, 2017 11:48 am, edited 1 time in total.
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Re: Do you see a meaningful change in your income with new Tax Bill?
I'll save 2k this year.
Probably will never bother to buy property in CA under new rules. Property tax has more political risk than I'd expected.
Probably will never bother to buy property in CA under new rules. Property tax has more political risk than I'd expected.
Re: Do you see a meaningful change in your income with new Tax Bill?
In the short run, it would lower taxes slightly. We are of moderate income and have taken the standard deduction about 2/3 of the time since the 1986 act. In the long run it's too soon to tell, noting that many provisions sunset around 2025 and the the last tax cut of this size (in 1981) was followed by several tax increases over the next dozen years.
On the wealth side, I see slower growth in the value of our Bay Area home. This is the right thing but not the best means -- improved land use policies and more housing supply would be better.
On the wealth side, I see slower growth in the value of our Bay Area home. This is the right thing but not the best means -- improved land use policies and more housing supply would be better.
- TomatoTomahto
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Re: Do you see a meaningful change in your income with new Tax Bill?
I'm tending to believe my CPA more than the web site.DaftInvestor wrote: ↑Fri Dec 22, 2017 10:44 amWhat reason did your CPA give for paying more? It likely depends upon how high your property tax and state taxes are whether or not the doubling of the standard deduction along with the marginal tax rate decreases will benefit you or not.TomatoTomahto wrote: ↑Fri Dec 22, 2017 10:36 amI hope so. Our CPA estimated that we'd be paying more in taxes. The web site estimated we'd save $28k. I hope that the web site is rightDaftInvestor wrote: ↑Fri Dec 22, 2017 10:29 amTry this:
http://taxplancalculator.com/
Missing AMT and some corner cases - but if your taxes aren't too complex its a nice compare
Fwiw, we don't have mortgage interest, our charitable contributions are modest, and our deductions have been mostly property tax and state taxes. It is difficult to see how we don't get more hammered by the new law, but time will tell.
I wonder if this will impact populations in high-tax states in the coming years.
Our property taxes are around $35k. Our state income tax for 2016 was a lowish six digit amount. Our income is expected to go up, and did in 2017.
I personally don't see how we could come out ahead just by the reduction in marginal tax rate. Mind you, I'm not complaining and am fully aware that we are very lucky. However, I don't see any way, short of becoming a pass-through (impossible, I think) that our taxes will go down.
Disclosure: we are considering changing state of residence, and the $28k included moving to another high, but not as high, tax state. In our current state, we are projected by the web site to save $6k.
I get the FI part but not the RE part of FIRE.
Re: Do you see a meaningful change in your income with new Tax Bill?
Nerdwallet has published how the tax bill will affect your taxes with your income.
How will your tax bracket change under the new tax bill?https://www.nerdwallet.com/blog/taxes/f ... -brackets/
How will your tax bracket change under the new tax bill?https://www.nerdwallet.com/blog/taxes/f ... -brackets/
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Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
Re: Do you see a meaningful change in your income with new Tax Bill?
I am in about the worst possible situation when it comes to the new bill: single, no kids, W2 employee, high state/local taxes, just bought a house (no mortgage, high property taxes) this year, county won't let me prepay next property tax installment, my marginal rate will go up, lose the employee home office deduction...I'm sure there is other stuff that I've missed! Doing my taxes in 2019 is gonna hurt...at this point I'm just trying not to think too much about it. Only bright spot: I opened a DAF last year so am going to use that to offload some appreciated shares that have been spitting out huge capital gains. Oh, and that it could have been even worse (i.e. original talk about limiting 401K contributions and charitable deductions...)
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Re: Do you see a meaningful change in your income with new Tax Bill?
Not sure what change is meaningful, but we will pay about $2200-$2500 dollars less in taxes. I can either pay at a lower level, or add some more $$$ to our portfolio withdrawals and pay the same taxes as this year.
Either way we are better off. We don't itemize, but that is not a bad thing as we have no mortgage, real estate taxes are low, no state income tax, and our medical insurance is very good.
I hope the various charities aren't impacted excessively; I haven't changed our giving despite being unable to itemize for several years. Hopefully the giving will continue from those who will probably be better off taking the standard deductions. Income tax reduction was never my reason to give.
Broken Man 1999
Either way we are better off. We don't itemize, but that is not a bad thing as we have no mortgage, real estate taxes are low, no state income tax, and our medical insurance is very good.
I hope the various charities aren't impacted excessively; I haven't changed our giving despite being unable to itemize for several years. Hopefully the giving will continue from those who will probably be better off taking the standard deductions. Income tax reduction was never my reason to give.
Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
Re: Do you see a meaningful change in your income with new Tax Bill?
I estimate about a 1.5-2% increase in take home pay. Is that "meaningful"?
However, I'll likely put us partially into Roth 401Ks at work and balance it back at to net zero change in take home pay.
However, I'll likely put us partially into Roth 401Ks at work and balance it back at to net zero change in take home pay.