One of the best reasons to leave California – high taxes – is even more compelling with the Republican tax reform
- The Republican tax bill means high priced California homes lost some mortgage interest deduction
- High California taxes are much less deductible
- Don’t expect them to lower local taxes
By Hal DeKeyser
California is not known as a hotbed of Republicanism, and the Republican tax bill penalizes high tax states like California.
Before that, all those self-imposed taxes could at least be written off, meaning it would lower your federal income tax bite. It’s known as SALT, or State And Local Taxes. That still will be the case, but with a limit that will affect California payers more than their neighbors (only because your California leaders tax you so much more than other states).
The cap on SALT deductions was set at $10,000. That means anything California or its cities and other jurisdictions impose on you already burdened taxpayers above that limit, you’ll pay the entire bill yourself – no giveback from the federal government.
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It’s going to cost you
So if you used to deduct $25,000 of state and local taxes each year at the 25 percent federal income tax bracket, that would save you $6,250 a year. This provision would reduce that by $3,750 – yet another taxation reason to flee California.
You can argue whether this was right, wrong, good, or bad. Part of the logic behind it was that low-tax states were picking up the slack from high-tax states – and if you collectively wanted to self-impose high taxes, go ahead, but pay for that yourself, not through your neighbors.
Regardless of the politics, it passed, so it’s your reality now.
Unless you would consider leaving California . . . and buy a home in a place where your taxes are much, much lower, your deductions are more usable and real estate is less expensive.
To Las Vegas, for example.
See the entire #DumpCal blog series
- 10-plus reasons to Dump California for Vegas
- DumpCal Reason 1 — California housing costs are 2½-5 times Vegas’
- DumpCal Reason 2 — California income taxes are U.S. highest; Nevada, the lowest (as in NO state tax)
- DumpCal Reason 3: — California property taxes are 2½-5 times higher
- DumpCal Reason 5 – Vegas things to do are easier, cheaper, and plentiful
- DumpCal Reason 6 – Republican tax bill will cost Californians more in income taxes
- DumpCal Reason 7 – Las Vegas airport: convenient, flies everywhere, has best deals
- DumpCal Reason 8 – Leaving Las Vegas: easy trips to Cal, Arizona and Utah
- DumpCal Reason 9 – The Las Vegas economy is healthy and growing
- DumpCal Reason 10 – California regulation is killing businesses
- DumpCal Reason 11 — Leaving California – disasters – earthquakes, fires, mudslides …
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