Everything has a downside, and when it comes to marriage equality, the downside could be the new Republican tax bill. The new law is a Christmas gift to the fabulously wealthy. For the rest of us, it’s a mixed bag at best.
Here are five ways that the new law could affect you, and often not for the better.
1. The marriage penalty goes away
One benefit of the new bill is that it eliminates the marriage penalty, the tax code that led married couples to pay more filing jointly then each would have paid filing if single. That’s the one clear benefit in the bill.
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2. Married couples get the same credit for local taxes as someone single
Live in a high-tax state, like California or New York? You’ll be able to deduct only up to $10,000 in state income or property taxes, dramatically less than in the past. But if you were single, you could deduct the same amount. Moreover, there’s that $10,000 cap now, where the deduction used to be unlimited.
3. Charitable contributions aren’t deductible
If you like to support your local community center or an AIDS charity, keep up the good work. You just won’t get to take it off on your taxes anymore. That change is likely to harm many charities as the financial advantage of altruism disappears.
4. Your mortgage interest isn’t as deductible as it was
Under the current law, you can deduct up to $1 million in mortgage principle. Under the GOP bill, that’s reduced to $750,000. That’s still a lot of money, but if you are buying a property in a high-priced area, like Manhattan or Silicon Valley, where $750,000 buys you a 300 square-foot studio, you just lost some value.
5. Your bill will go up in 2025
Even if you got a break now, enjoy it while you can. All the personal income tax changes temporary. They are set to expire in order to meet Congressional requirements that the bill not add more than $1.5 trillion to the budget.
Of course, making their priorities clear, the Republicans have made the corporate tax cuts permanent. At that point, 83% of the tax benefits will go to the top one percent.
That’s your tax dollars at work.
