Middle-class homeowners smacked by new tax law
As taxpayers sort through the new regulations signed into law by the Tax Cuts and Jobs Act, one demographic is feeling particularly hard-hit: Middle-class homeowners who live in high-tax areas. Many are just now learning they owe thousands this year rather than getting the refunds they usually received.
Their problem sits with the new deduction cap on state and local taxes, which the law caps at $10,000. Before 2018, taxpayers were allowed to deduct their total combined state and local taxes from their federal taxes, softening the blow of high property and income taxes in states like New Jersey and California.
The impact is keenly felt by middle-class homeowners who live in towns with high property taxes, which some told CBS MoneyWatch they choose for their great public schools. Getting slammed by higher taxes under the new tax law has prompted some to rethink their plans, even mulling moving after their kids graduate from high school.
Making it worse, they say, is a perception that the SALT deduction cap is only hitting wealthy families, which they say isn't accurate.
"The rest of the country thinks it's only affecting people who are wealthy and who can afford it, but we know it's not just the case," said Kate Fawcett, who lives with her family in Glen Ridge, New Jersey. "This is just going to wipe us out."
https://www.msn.com/en-us/money/tax-proof-your-portfolio/middle-class-homeowners-smacked-by-new-tax-law/ar-BBUVBqZ?li=BBnbfcN