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Noticed that MANY tax credits for families filing MFJ phase out around the $160k income range. If you have several kids in school, making just above that feels like a punitive cliff.
It is HARD to get promotions/raises, and seems like hardworking families with children in school are being pummeled by sharp tax policy credit/deduction income phaseout cliffs, many in that same ~$160k range. In some cases it would be better to make less, given the sharp cliff phase out of credits.
Doesn't seem right to me. A more gradual phase out slope seems more "fair" and not punishing hardworking families just making a little more than the cutoffs.
$180k income is NOT rich. Much more in common with $150k income than people making $400k income.
You have to draw the line somewhere and being a hhld earning 150k or more puts you in the top 18.3% so where do you want the magic line drawn? It’s not about being rich as that’s certainly not how the line is https://www.statista.com/statistics/...ome-in-the-us/
Edit: and being in Houston you are almost 2.6x the median HHLD I think you’d be able to survive with fewer tax breaks
In addition to it being, top 20 percentile to be in that income range (agree with low expectations it has to start somewhere), that’s also the taxable income phaseout, not just household income. In other words, they would be AFTER the 25k (ish) married standard deduction and other tax deferred items like 401k. So they’d be making 180+ or more gross.
Additionally, many of the tax credits usually have phaseouts. It’s not like you hit 120 or 160 and it’s always automatically gone. It’s often reduced $50 or $100 or whatever for every $1,000 you’re over until it’s eventually gone. Which means your “you’d be better off making less” claim isn’t true. It’s also not true because if you make an extra $1,000 and got taxed at 24% on that marginal dollar, you still got to keep 76%. Just because you may have lost a non refundable credit that dollar for dollar credit that applies to your tax liability does not mean you’re worse off to earn the extra income that costs you the credit.
And no 180k of income isn’t “rich” because 1 year of income doesn’t speak to wealth, but being in that income range certainly places you on the trajectory to be rich. Ie top 20% tile
Last edited by Thatsright19; 01-17-2022 at 11:55 AM..
Noticed that MANY tax credits for families filing MFJ phase out around the $160k income range. If you have several kids in school, making just above that feels like a punitive cliff.
It is HARD to get promotions/raises, and seems like hardworking families with children in school are being pummeled by sharp tax policy credit/deduction income phaseout cliffs, many in that same ~$160k range. In some cases it would be better to make less, given the sharp cliff phase out of credits.
Doesn't seem right to me. A more gradual phase out slope seems more "fair" and not punishing hardworking families just making a little more than the cutoffs.
$180k income is NOT rich. Much more in common with $150k income than people making $400k income.
In my mind, $160K/year is still a whole lot of money for people to make. When I made that kind of money, I took international vacations and stayed at places where people showed up in the likes of Rolls Royce and Lamborghini. -And still saved way more than I spent. So, yeah, I would consider people who make that kind of money to be in the rich category.
Because we have a very progressive tax system which a lot of people don't understand (I didn't) until they start clearing that hurdle. They don't publicize it a lot because it doesn't support the 'fair share' narrative.
I used everything I could to minimize the AGI....max 401k, max HSA contributions. Only so much you can do.
In my mind, $160K/year is still a whole lot of money for people to make. When I made that kind of money, I took international vacations and stayed at places where people showed up in the likes of Rolls Royce and Lamborghini. -And still saved way more than I spent. So, yeah, I would consider people who make that kind of money to be in the rich category.
I make double that and I don't feel rich.
I can afford just about anything I want, but I still look for the best possible deals.
My last stay was $125/night in Miami Beach, compared to some of the $300/night places I saw.
And no 180k of income isn’t “rich” because 1 year of income doesn’t speak to wealth, but being in that income range certainly places you on the trajectory to be rich. Ie top 20% tile
You have a very odd definition of rich - being in the top 20% percentile (I assume you mean top 20% of wealth).
You have a very odd definition of rich - being in the top 20% percentile (I assume you mean top 20% of wealth).
You didn’t understand what I said. I literally said word for word that 180 income doesn’t speak to being rich because wealth is what makes someone rich. Then I said that incomes puts you on the “trajectory to be rich”…ie potentially…someday.
$160k HHI........really depends on where you live.
That income in NYC, Honolulu, San Francisco etc., is going to hit differently than it would in Detroit, Omaha or Birmingham. Obviously if you have more kids that makes a difference as well.
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