Budget Bill supposed tax breaks are illusory
Minor tax breaks for higher incomes. Low incomes get little and lose existing benefits.
Forget the PR bilge from Social Security about how the Breathtakingly Bad Bill is "historic tax relief" for seniors. It's not. Yes, the budget bill does add an additional standard deduction for seniors of $6,000 for filing Single, $12,000 for Married. Which might sound great but isn't. First off, this doesn't help low-income seniors, who generally pay no tax now. So, those who could really use a tax break get nothing.
Join me in being surprised that this does help the more prosperous. Imagine that! "The new deduction would be more meaningful for upper-middle-class seniors." The deduction phases out at $150,000 income for upper-middle class married seniors. This is a 22% tax bracket, so the max savings would be $2,640. Not a whole lot for those at that income level.
Tips: Taxpayers can deduct up to $25,000 in tips from taxable income. This phases out over $150,000 income. An unwanted side effect of this will probably be that people will tip less, and employers will reduce base pay.
I do taxes. Many tip income returns are married or Head of Household parents who do it part time. With child tax credits and earned income credits, they already don't owe tax and have sometimes sizable refunds. And, these new provisions are deductions, not refundable credits.
Overtime: Can deduct up to $12,500 in overtime if filing Single, $25,000 for MFJ. Again, employers could drop base pay if some OT is not taxable. Yes, of course, some employers will do this.
The budget bill really hurts lower income taxpayers because Medicaid, SNAP, ACA will be reduced or eliminated. They will be worse off, even if they qualify for these deductions.
AOC:
The cap on that is $25,000 while you’re jacking up taxes on people who make less than $50,0000 across the United States, while taking away their SNAP, while taking away their Medicaid, while kicking them off of the ACA and their health care extensions. So, if you’re at home and you’re living off tips, you do the math. Is that worth it to you? Losing all your health care, not able to feed your babies, not being able to put a diaper on their bottom in exchange for what? This bill is a deal with the devil.”