Did our state representatives in Congress know all along that 2018 Tax Reform may result in a large shift of taxes from the Federal government to their respective state government coffers?
There is much information on the 2018 Tax Reform bill that is now signed into law and effective for 2018 but little about the effect on state taxes here in Virginia (and likely other states, too).
Some taxpayers may find that Line 5 of Schedule A now capped at $10,000 will result in a reduction in itemized deductions for 2018 at the state level.
The result of fewer itemized deductions at the state level of-course will increase your state taxes.
State income taxes withheld were never included on the state return but because real estate or property taxes may take you over the new $10,000 cap you may find a surprise when filing 2018 state tax returns.
More taxes due to the state.
Another, even more important, aspect of 2018 Tax Reform is that many more taxpayers will no longer being itemizing deductions because the Federal standard deduction has increased substantially.
If you are one of those who used to itemize and now find that in 2018 your itemized deductions are less than the standard deduction then, if you file using the standard deduction (still optional) you must, in Virginia, also file your state return using the standard deduction.
For singles this is only $3,000 and for married-joint returns it is only $6,000 in Virginia.
Yikes! This also could result in large increases in your VA state taxes.
From what I have seen so far, the savings in taxes at the Federal level more than offset any increase in taxes at the state level but you have to run the numbers.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.