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GOP tax plan analysis for NYC residents

Now that the tax brackets have been released and the plan has a 90%+ chance of passing, I ran some numbers for NYC people before and after, using the current tax brackets as are shown in the links below.

These numbers take into account the changes in Federal tax rates, and the changes to deductibility of NY State and City taxes, which go from being fully deductible to a capped deductible of $10k. It does not take into account mortgage interest deductibility, property taxes, or other adjustments.

Under the new plan, most middle class filers (<$500k Married or <$250k Single) will see lower taxes, while filers who make more than that will see tax increases that have some proportionality to their excess income. Don’t forget to lower the gross income by deductions related to retirement and health savings accounts, and other things like that.

Married filers benefit more from the plan, due to its more favorable tax brackets for married filers. High income earners benefit less from the plan, due to loss of deductibility of state and local taxes. 

If you own a house with high property taxes, you will lose more from the plan. If you live somewhere with lower SALT (anywhere that is not NYC basically), you will benefit more from the plan.

Edit: I’ve changed the numbers so that they assume the filers under my scenario will choose the new tax plan’s standard deduction ($24k for Married, $12k for Single), over the $10k deduction for SALT that only applies to itemized tax returns. You would choose to itemize deductions if you have other deductible expenses, such as mortgage interest, that would increase your itemized deductions to some level that exceeded the standard deduction.

https://cnbc.com/2017/12/15/find-your-new-tax-brackets-under-the-fin...

https://smartasset.com/taxes/new-york-tax-calculator

Positive number means higher taxes.

Married Filing Jointly 

$100k: -5.3k

$150k: -5.6k

$200k: -6.4k

$250k: -6.9k

$300k: -9.1k

$400k: -9.7k

$500k: -5.5k

$600k: -4.5k

$800k: -1.6k

$1 million: +1.6k

$2 million: +18k

Single:

$100k: -2.8k

$150k: -3.3k

$200k: -1.4k

$250k: +1.7k

$300k: +4.5k

$400k: +9.9k

$500k: +13.9k

$600k: +15.3k

$800k: +18.6k

$1 million: +21.9k

$2 million: +46.4k

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Now it’s more beneficial to get married and file jointly

krnyc2008 wrote:

Now it’s more beneficial to get married and file jointly

Yes, joints are great. 

"It is a rational thesis that we are all within a dream; it will be a mystical sanity to say that we are all awake." - G. K. Chesterton

That’s untrue. Under both new and old tax plans, two people will collectively pay more taxes if filing jointly than if they were both individually filing returns. You are penalized for getting married under both tax plans. 

The more positive effects shown above for married filers is because the new plan penalizes married filers to a significantly lower extent than the old plan. This is one highly positive change, in my opinion. Even though the new plan creates fewer benefits for single filers, single filers will still pay lower taxes than married filers at high income levels (~$300k individual earnings), and the same at lower income levels. 

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

ohai wrote:

That’s untrue. Under both new and old tax plans, two people will collectively pay more taxes if filing jointly than if they were both individually filing returns. You are penalized for getting married under both tax plans. 

The more positive effects shown above for married filers is because the new plan penalizes married filers to a significantly lower extent than the old plan. This is one highly positive change, in my opinion. Even though the new plan creates fewer benefits for single filers, single filers will still pay lower taxes than married filers at high income levels (~$300k individual earnings), and the same at lower income levels. 

I see. So my recently married friend still did have a reason to complain..

I don’t get why married people get penalized in this country

Does this also take AMT into account?

No, it does not include AMT. You need a USTA degree to understand that anyway.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

.

I love my cheese. I got to have my cheddar.

krnyc2008 wrote:

ohai wrote:

That’s untrue. Under both new and old tax plans, two people will collectively pay more taxes if filing jointly than if they were both individually filing returns. You are penalized for getting married under both tax plans. 

The more positive effects shown above for married filers is because the new plan penalizes married filers to a significantly lower extent than the old plan. This is one highly positive change, in my opinion. Even though the new plan creates fewer benefits for single filers, single filers will still pay lower taxes than married filers at high income levels (~$300k individual earnings), and the same at lower income levels. 

I see. So my recently married friend still did have a reason to complain..

I don’t get why married people get penalized in this country

1. synergies

2. economies of scale

3. too big to fail.

I love my cheese. I got to have my cheddar.

You will save money by getting married if one spouse does not have income; the tax brackets do increase - just not by 2x. This rule was probably constructed in a time where most households had only one income.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

Well, time to change the rules and incentivize (or at least not penalize for) young people to form the legal units. 

yea wtf why am i being penalized for being single, rich, and good looking?

"You want a quote? Haven’t I written enough already???"

RIP

igor555 wrote:

yea wtf why am i being penalized for being single, rich, and good looking?

Seriously. I can’t help being 6’2” with a natural SRK 6-pack.

Hey Hamilton, have a holly jolly Christmas.

It’s more like you are penalized for living in a high spending state, or Blue state. That is, a state that supported the losing team…

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

man f that. will a domestic partnership reduce my taxes?

"You want a quote? Haven’t I written enough already???"

RIP

^lol. no money for cali wildfires btw. but so much money for other red states.

cant blame the guy for helping his supporters and penalizing the critics! any rational player would do this.

I love my cheese. I got to have my cheddar.

ohai wrote:

It’s more like you are penalized for living in a high spending state, or Blue state. That is, a state that supported the losing team…

I don’t think it matters where you live and it’s been the case for awhile. 

I don’t understand. What I was referring to is the reduction in state and local tax deductions under the new Federal tax plan. In the old system, unlimited state and local taxes are deductible on your Federal tax return. The new plan caps these deductions at $10k. This was one of the most contentious changes in the new plan, and it disproportionately hurts residents of states with the highest local taxes.

This change was politically possible partly because there are no Republican Senators from CA, NY or NJ, and there are only a few members from these states in the House of Representatives. Overall, Democrat leaning states tend to have higher taxes. 

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

ohai wrote:

I don’t understand. What I was referring to is the reduction in state and local tax deductions under the new Federal tax plan. In the old system, unlimited state and local taxes are deductible on your Federal tax return. The new plan caps these deductions at $10k. This was one of the most contentious changes in the new plan, and it disproportionately hurts residents of states with the highest local taxes.

This change was politically possible partly because there are no Republican Senators from CA, NY or NJ, and there are only a few members from these states in the House of Representatives. Overall, Democrat leaning states tend to have higher taxes. 

I wasn’t talking about SALT taxes. I was referring to taxes penalizing married couples versus single filers. My understanding is that has always been the case no matter which state one lives in. 

Was just reading that the personal exemption is getting the axe, so for those with incomes under the personal exemption phase out the huge tax cut due to the “doubling of the standard deduction” is misleading when you net it against the personal exemption going away.