NJ WINNERS & LOSERS WITH TAX PLAN
The new Republican tax plan is tilted in favor of the rich and corporations and would increase the federal deficit by as much as $1.5 trillion over 10 years. Even after accounting for economic growth, the bill wold add more than $1 trillion to red ink to the federal government. Many middle americans will get lower taxes as well, albeit only through 2025, primarily through lowering rates, increasing the standard deduction and doubling the child tax credit. Those provisions expire so that the bill does not increase the deficit even more. This is going to be one of the greatest gifts for the middle income people of this country that they have gotten for Christmas. In New Jersey and other high tax states however, many middle class taxpayers will not get the benefits of the Trump tax cuts. That is because the Republican bill guts the federal deduction for state and local tax income, sales and property taxes. In some cases, taxes would go down. but the loss of most of the state and local tax break would result in a tax hike for many.
Here is how the tax bill will affect different New Jersey households
INDIVIDUAL, NO KIDS EARNING $75,000
A single individual earning $75,ooo and taking a standard deduction would see a tax cut of around $1,950.
MARRIED COUPLE, NO KIDS EARNING $125,000
A married couple earning $125,000 would see their tax bill rise by approximately $1,900 That is because they could be paying state income taxes of $26,003 but can only deduct $10,000 in income and property taxes.
MARRIED COUPLE TWO KIDS EARNING $175,000
A couple with two kids earning $175,000 initially would see an increase in taxes of $2,050 because of the loss of most of the state and local tax break The expanded $20,, per child tax break instead would lower their tax bill by $1,950
MARRIED COUPLE, THREE KIDS EARNING $170,000
A family with two bread winners, one making $120,00 and one earning $50,000 with three kids, would see their child tax credit to $6,000 from $1,000 most likely lowering there overall tax bill.
MARRIED COUPLE, NO KIDS, EARNING $135,000
This couple would see a tax hike of $792 because of the loss of most of the state and local tax deduction and end of the personal exemption.
INDIVIDUAL, NO KIDS EARNING $200,000
An individual making $200,000 could save $1,192 due to lower rates.
MARRIED COUPLE, NO KIDS EARNING $250,000
According to the Tax Police Center such a household would pay $730 more.
MARRIED COUPLE, NO KIDS EARNGING $285,000
They would save $1,034 on their tax bill The couple would no longer be subject to the alternative minimum tax.
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Copyright © Daniel Cullinane CPA.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778