Tax Plan and NYC Income

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UpandDown97

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Tax Plan and NYC Income

Postby UpandDown97 » Sat Dec 02, 2017 1:01 am

Asking for someone to check my math and fill in some assumptions. Let's say the Senate bill as is passes.

Assumptions: 180k income, taking the standard deduction so taxable income is 168k. Single, unmarried, the tax rate is: $31, 548 plus 32% over 160k and under 200k. (Got this from the bill).

So, $31,584 + (.32 * 8,000) = 31,584 + 2,560 = $34,144. NYC State and Local is about 12%. So .12*180,000 = $21,600. Total tax burden is 34,144+21,600 = 55,744.
180,000 - 55,744 =125,256; this is total take home pay.

Under current law, total take home is about 115k? So we gain about 10k if this bill passes. Correct?

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Re: Tax Plan and NYC Income

Postby Pulsar » Sat Dec 02, 2017 1:27 am

No, you must be missing something, because the loss of the state and local deduction should mean you get completely wrecked. This bill totally fucks associates in high tax blue states.

I'll be a third-year (with various itemizing stuff that may not apply to you), and my taxes will go up $5.5k under the Senate version as it was this morning.

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PeanutsNJam

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Sat Dec 02, 2017 1:30 am

didn't include FICA
Last edited by PeanutsNJam on Sun Dec 03, 2017 3:03 am, edited 1 time in total.

UpandDown97

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Re: Tax Plan and NYC Income

Postby UpandDown97 » Sat Dec 02, 2017 1:36 am

Could be off with some smoothing here and there.

In any event, to be sure, take home now is about 115k, so we see about 10k more?

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Re: Tax Plan and NYC Income

Postby UpandDown97 » Sat Dec 02, 2017 1:38 am

FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

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Re: Tax Plan and NYC Income

Postby Hikikomorist » Sat Dec 02, 2017 1:39 am

UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

Aren't they still excluding law firms as "service providers"?

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PeanutsNJam

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Sat Dec 02, 2017 1:41 am

UpandDown97 wrote:Could be off with some smoothing here and there.

In any event, to be sure, take home now is about 115k, so we see about 10k more?


We both made a mistake. Forgot to include FICA (social security and Medicaid). That’ll amount to a little under 10k. So your taxes will more or less stay the same. The pain of removing the state tax deduction is somewhat dulled by a larger standard deduction and lower marginal rate.

ETA: I’m not sure about this, but doesn’t FICA have a cap? Idk what it is. Suffice it to say, you’re not taking home an extra 10k/year.

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Re: Tax Plan and NYC Income

Postby UpandDown97 » Sat Dec 02, 2017 1:56 am

PeanutsNJam wrote:
UpandDown97 wrote:Could be off with some smoothing here and there.

In any event, to be sure, take home now is about 115k, so we see about 10k more?


We both made a mistake. Forgot to include FICA (social security and Medicaid). That’ll amount to a little under 10k. So your taxes will more or less stay the same. The pain of removing the state tax deduction is somewhat dulled by a larger standard deduction and lower marginal rate.

ETA: I’m not sure about this, but doesn’t FICA have a cap? Idk what it is. Suffice it to say, you’re not taking home an extra 10k/year.


1.45% for Medicaid, so $2,610, and then cap of $7,874 for social security. Total of 10,484. 53,232 + 10,484 = 63,716.
180,000 - 63,716 = 116,284. So we get another ~1k in our pocket.

UpandDown97

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Re: Tax Plan and NYC Income

Postby UpandDown97 » Sat Dec 02, 2017 1:59 am

Hikikomorist wrote:
UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

Aren't they still excluding law firms as "service providers"?


Not sure. I thought it had changed recently, but its hard to keep up.

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Sat Dec 02, 2017 2:03 am

UpandDown97 wrote:
PeanutsNJam wrote:
UpandDown97 wrote:Could be off with some smoothing here and there.

In any event, to be sure, take home now is about 115k, so we see about 10k more?


We both made a mistake. Forgot to include FICA (social security and Medicaid). That’ll amount to a little under 10k. So your taxes will more or less stay the same. The pain of removing the state tax deduction is somewhat dulled by a larger standard deduction and lower marginal rate.

ETA: I’m not sure about this, but doesn’t FICA have a cap? Idk what it is. Suffice it to say, you’re not taking home an extra 10k/year.


1.45% for Medicaid, so $2,610, and then cap of $7,874 for social security. Total of 10,484. 53,232 + 10,484 = 63,716.
180,000 - 63,716 = 116,284. So we get another ~1k in our pocket.


This would only be true for those that can’t really take advantage of itemized deductions aside from SALT.

If you give enough charity to take advantage of that deduction, and if you own property to take advantage of the mortgage interest deduction/property tax deduction, as well as other deductions, the repeal of SALT might leave you with a higher tax burden. The SALT repeal will also hurt more the more you make—at one point, when your state and local taxes high enough, the SALT repeal would probably screw you. Midlevels with good bonuses probably won’t see an increase in take home pay. They might see a decrease if they rely on itemizing.

If you’re married to someone who doesn’t make much money, and you don’t have kids, you’d probably see the biggest boon in the increased standardized deduction. Ultimately, it comes down to your individual situation. The GOP bill might be good for some biglawyers, bad for others. Hard to tell without doing calculations for each situation.

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Re: Tax Plan and NYC Income

Postby 2014 » Sun Dec 03, 2017 11:32 pm

I've seen various calculations and it seems to be more or less a wash as first years and every year it gets a bit worse (because amount of SALT goes up and by 2nd year your marginal rate hits the 32% bracket). I can't find the last one i saw but it's something like a $2k hit as a 2nd year, $3500 as a 3rd year and $6000 as a 4th year (all assuming single person, no dependents, standard deduction).

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Re: Tax Plan and NYC Income

Postby Hikikomorist » Sun Dec 03, 2017 11:34 pm

http://taxplancalculator.com/calc

Not sure how good/accurate it is.

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PeanutsNJam

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Mon Dec 04, 2017 4:13 am

Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.

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Re: Tax Plan and NYC Income

Postby Hikikomorist » Mon Dec 04, 2017 7:57 am

PeanutsNJam wrote:
Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.

I think you forgot to take into account itemizations under the current system.

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Re: Tax Plan and NYC Income

Postby EliotAlderson » Mon Dec 04, 2017 9:41 am

Don’t forget AMT. Not clear if that will stick around but that tends to get us when we start hitting mid and senior levels.

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Re: Tax Plan and NYC Income

Postby 2014 » Mon Dec 04, 2017 11:47 am

PeanutsNJam wrote:
Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.


What do you mean by the bolded? NY 2nd years are already at 215k...

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PeanutsNJam

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Mon Dec 04, 2017 12:05 pm

Hikikomorist wrote:
PeanutsNJam wrote:
Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.

I think you forgot to take into account itemizations under the current system.


I did not forget. You could easily check lol. This is for 207k in NYC. Granted, it does not include NYC local tax, but your website didn't give the option to put in a local tax rate.

Image

2014 wrote:What do you mean by the bolded? NY 2nd years are already at 215k...


How ubiquitous are bonuses like that? I was factoring in retirement contributions. 2nd years even with 25k bonus would be at 197k after 401k.

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Re: Tax Plan and NYC Income

Postby Hikikomorist » Mon Dec 04, 2017 1:05 pm

PeanutsNJam wrote:
Hikikomorist wrote:
PeanutsNJam wrote:
Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.

I think you forgot to take into account itemizations under the current system.


I did not forget. You could easily check lol. This is for 207k in NYC. Granted, it does not include NYC local tax, but your website didn't give the option to put in a local tax rate.

Image

2014 wrote:What do you mean by the bolded? NY 2nd years are already at 215k...


How ubiquitous are bonuses like that? I was factoring in retirement contributions. 2nd years even with 25k bonus would be at 197k after 401k.

My bad. I missed the part where it said to exclude SALT from itemizations.

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Re: Tax Plan and NYC Income

Postby 2014 » Mon Dec 04, 2017 2:54 pm

PeanutsNJam wrote:
Hikikomorist wrote:
PeanutsNJam wrote:
Hikikomorist wrote:http://taxplancalculator.com/calc

Not sure how good/accurate it is.


According to this, you start to break even under the Senate plan at a little over 207k/year, after which the Senate plan starts to tax you more (in NYC). Break even point is around 350k in Texas, after which the Senate plan will start to tax you more. NYC juniors get to have a tax break until like their 4th year lol.

Lol in NYC, if you make 1 mil/year, the senate plan would increase your fed income tax by 29k. According to the calculator. If that's right, it's not even a tax cut for the rich. It's just a tax cut for corporations and people making <207k.

I think you forgot to take into account itemizations under the current system.


I did not forget. You could easily check lol. This is for 207k in NYC. Granted, it does not include NYC local tax, but your website didn't give the option to put in a local tax rate.

Image

2014 wrote:What do you mean by the bolded? NY 2nd years are already at 215k...


How ubiquitous are bonuses like that? I was factoring in retirement contributions. 2nd years even with 25k bonus would be at 197k after 401k.

Didn't pull out 401k, that's a fair point.

I'm unaware of any 180k firm in NY paying below market bonuses as a baseline (only imposing onerous hours requirements to achieve it) so I'm just assuming people are hitting hours minimums since it's the easiest assumption to make.

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Re: Tax Plan and NYC Income

Postby SplitMyPants » Mon Dec 04, 2017 4:05 pm

UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.


accounting for trickle down, though, NYC to $180k-plus-House-in-Hamptons basically confirmed if this thing passes

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Re: Tax Plan and NYC Income

Postby BenJ » Mon Dec 04, 2017 4:17 pm

Hikikomorist wrote:
UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

Aren't they still excluding law firms as "service providers"?


Yeah, I think partners actually get really walloped by the tax plan, even more than associates, since they don't get the special pass-through treatment (if they did, it would be a huge tax cut for them - and there may end up being creative ways to structure for partners to get the tax benefits of the pass-through rates that accountants will figure out over the next year). Associates living in NYC might pay 2-3% more in taxes (with first-years getting a small cut and senior associates a slightly bigger increase), but partners living in NYC could be looking at their taxes going up by 10%. OTOH, many partners live in the NYC suburbs so don't pay city income tax - though if they have big mortgages and pay a lot in property tax it could be just as bad or worse for the suburban partners.

Note that married couples make out much better than unmarried individuals under the Senate plan, so partners who are married will be advantaged that way. The Senate plan largely closes the marriage penalty while the House plan mostly does not.
Last edited by BenJ on Mon Dec 04, 2017 4:21 pm, edited 1 time in total.

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Re: Tax Plan and NYC Income

Postby PeanutsNJam » Mon Dec 04, 2017 4:21 pm

BenJ wrote:
Hikikomorist wrote:
UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

Aren't they still excluding law firms as "service providers"?


Yeah, I think partners actually get really walloped by the tax plan, even more than associates, since they don't get the special pass-through treatment (if they did, it would be a huge tax cut for them - and there may end up being creative ways to structure for partners to get the tax benefits of the pass-through rates that accountants will figure out over the next year). Associates living in NYC might pay 2-3% more in taxes (with first-years getting a small cut and senior associates a slightly bigger increase), but partners living in NYC could be looking at their taxes going up by 10%. OTOH, many partners live in the NYC suburbs - though if they have big mortgages and pay a lot in property tax it could be just as bad or worse for the suburban partners.


Yeah law firms, private practice doctors/therapists, accountants, consulting, and things like that that usually bill hourly rates are probably gonna get wrecked by the tax plan.

I hope NY/C is forced to do something about their SALT because this is a huge incentive for a lot of businesses like that to move out of NYC.
Last edited by PeanutsNJam on Mon Dec 04, 2017 4:26 pm, edited 1 time in total.

BenJ

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Re: Tax Plan and NYC Income

Postby BenJ » Mon Dec 04, 2017 4:23 pm

PeanutsNJam wrote:
BenJ wrote:
Hikikomorist wrote:
UpandDown97 wrote:FWIW partners make more money under the senate version with the decrease in the rate on pass-through businesses and overall lower income rates. More houses in the Hamptons for them, I guess.

Aren't they still excluding law firms as "service providers"?


Yeah, I think partners actually get really walloped by the tax plan, even more than associates, since they don't get the special pass-through treatment (if they did, it would be a huge tax cut for them - and there may end up being creative ways to structure for partners to get the tax benefits of the pass-through rates that accountants will figure out over the next year). Associates living in NYC might pay 2-3% more in taxes (with first-years getting a small cut and senior associates a slightly bigger increase), but partners living in NYC could be looking at their taxes going up by 10%. OTOH, many partners live in the NYC suburbs - though if they have big mortgages and pay a lot in property tax it could be just as bad or worse for the suburban partners.


Yeah law firms, private practice doctors/therapists, accountants, hedge funds, consulting, and things like that are probably gonna get wrecked by the tax plan.

I hope NY/C is forced to do something about their SALT because this is a huge incentive for a lot of businesses like that to move out of NYC.


Agreed. The tax plan is going to cause a localized recession in NYC if it passes. Would not affect law firm hiring etc. since our work is much more national/international but could really hit NYC retail, real estate, etc. hard because the people with disposable income start spending less to cover their taxes. I think there's a lot of complacency in city and state government over how much this is going to hurt the local economy.

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Re: Tax Plan and NYC Income

Postby Anonymous User » Mon Dec 04, 2017 4:31 pm

PeanutsNJam wrote:ETA: I’m not sure about this, but doesn’t FICA have a cap? Idk what it is. Suffice it to say, you’re not taking home an extra 10k/year.


For the last 3+ months, my monthly take-home has increased by +1500 because I matched the cap. That should be factored in.

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Re: Tax Plan and NYC Income

Postby BenJ » Mon Dec 04, 2017 4:33 pm

Anonymous User wrote:
PeanutsNJam wrote:ETA: I’m not sure about this, but doesn’t FICA have a cap? Idk what it is. Suffice it to say, you’re not taking home an extra 10k/year.


For the last 3+ months, my monthly take-home has increased by +1500 because I matched the cap. That should be factored in.


Though starting third year (or second year with bonus) you'll owe the Medicare surtax (on amounts above $200k) towards the end of the year, which takes the wind out of hitting the SS tax cap a bit. SS tax cap was around $127k in 2017, believe it is only going up slightly in 2018 (but had a big jump 2016-2017).



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