GOP Property Tax, Mortgage Interest and 401(k) Tax Changes Released

The Chicago Tribune alert system sent the following information about the state of the Republican Party’s income tax reform plan:

“The House GOP tax plan would dramatically lower the cap on widely-used mortgage interest deductions to new loans totaling no more than $500,000, down from the current $1 million, according to a draft of the plan released Thursday.

“It would also immediately slash the corporate rate to 20% from 35%, eliminate deductions for state and local income taxes, cap property tax deductions at $10,000 and leave unchanged the popular 401(k) retirements savings plans used by many Americans.”


GOP Property Tax, Mortgage Interest and 401(k) Tax Changes Released — 8 Comments

  1. Case study

    Woodstock median income earner, no child tax credits:

    New tax bill would eliminate personal deduction of $4,050 and current standard deduction of $6,350, which now totals $10,400 in deductions.This would be replaced with a $12,000 standard deduction and no personal deduction, an increase of $1600 deductions.

    Woodstock: A $200,000 home with homestead exemption pays $7,644 property taxes. That would still be allowed ( being <$10,000 deductible cutoff).

    Loss of State tax deductions: would have had $2900 deduction for State tax ($278 federal tax savings) under old tax law.

    If new bracket = 12% 0-$90,000, then NEW fed tax would be:
    $58000-$12000- $7644 = $38356 taxable at 12%. $38356x .12= $4603

    Compared to $58000-$10,400-$7644-$2900= $37056. 9325 x .10 = $933; + (27731 x .15= $4160). Total old tax due would have been $5093.

    Savings of $490.

  2. I see parts of it as a shrewd plan, to further punish high tax, Democrat run hellholes like Illinois, Ca., NY.

    Pass it!

  3. Hmmm … looks like it’s time to relocate to a state with no state income tax.

  4. That $10,000 cap on property tax exemption needs to be indexed to the increasing burden put on we taxpayers by school costs in our County and in our State.

    The school teachers and administrators are given lavish salaries with benefits including outrageously high pensions with colas and in coming years we taxpayers will be on the hook.

    Our State is the worst of all 50 in terms of fiscal soundness.

    Illinois is in crisis financially and we citizens have been the chumps over the last 5 or more decades for electing the kinds of members that we have and have had in the Legislature in Springfield.

    Drastic legal actions are needed including a change in our Constitution that will do something about the outrageously high pensions that our retired teachers, their administrators and other government employees are getting or scheduled to get.

  5. Wrong details in analysis above, see CORRECTION.

    (new tax law details)
    brackets: 0-$45,000= 12%, $45,000-$200,000 25% tax rate for individual
    NO personal deduction ($4050), NO State tax deduction, Property tax deduction limited to $10,000.

    IF $58,000 Woodstock median income earner no dependent child tax credit:

    1. Assuming no itemization:
    OLD: $58,000-$4050- $6350= $47,600. Broken into old bracket taxation rates: ($9325 x .10 )= $932.5. $37,950 -$9,326 =$28624; $28624 x .15 = $4293.6. ($47600 – $37950= $9650. ($9650 x .25 = $2412.5. TOTAL $7639

    NEW: ($58,000- $12,000) x .12 = $5520 ; $1,000 x .25 = $250; TOTAL fed tax = $5770

    2. Assuming itemization:
    OLD: $58,000-$4050 personal deduction- $7644 property taxes- $2900 State taxes = $43406. Broken into old bracket taxation rates: ($9325 x .10 )= $932.5. $37,950 -$9,326 =$28624; $28624 x .15 = $4293.6. ($43406 – $37950= $5456. ($5456 x .25 = $1364. TOTAL $6590

    NEW: $58,000- $7644= $50356. %50356 x .12 = TOTAL $6043

    P-tax over $10,000 may NOT be deducted from federal taxable income.
    $10,000+ property tax on SOME homes is NECESSARY to pay for the majority of Woodstock CUSD 200 homes which pay lower p-tax than costs necessary to pay teachers’ and Administrators’ contractually obligated entitlements (current and retiree obligations which are collateralized by taxable property within school taxing district).
    State Tax not allowed to be deducted from Federal taxable income means double taxation; at some point the earner would owe more tax than earned income, which is a powerful social engineering force toward driving workers into welfare.
    INFLATION will make $10,000 p-tax and other newly-minted tax-deduction-disallowances very relevant in the near future. (As Alt-Min was when inflation made a $50,000 salary the norm).

  6. Sounds like it’s to leave Woodstock.

    I for One downsized in d155 got lucky to sell immediately after Trump election. Took advantage of leftists
    News outlets spooking buyers.

    The market in McHenry county for homes over 260k has since tanked.

    Many homeowners are indeed stuck in this county with no way out except a haircut on the sales price or strategic default.

    The death spiral in the county is Acceratong while Nero’s at d155 vote yet another tax increase

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