Broker Check

The Tax Savings and Jobs Act

The Results Are In


By:  James C. Denton, CFP®

April 16, 2019


As another tax season fades into the rearview mirror, the final stats on the 2017 tax bill are also beginning to take shape, and the story is a positive one.  While a lot of people don’t realize it, and explanations often don’t seem to help, the fact is only ~6% of taxpayers nationwide were harmed by the changes [1].

Most importantly, the loss of the SALT deduction was not nearly as detrimental to the residents of NJ and other high tax states as it was feared to be.   Causation … in most cases where it might have made a difference, either the increase in the standard deduction and the reduction in the tax rates offset the effect or, more commonly, the taxpayer had lost the deduction years ago to the Alternative Minimum Tax and just didn’t know that he wasn’t getting any benefit from it.


Did you know … If you have been paying the Alternative Minimum Tax, the state and local tax deduction was usually the reason why, effectively eliminating or at least substantially reducing the benefit of that deduction.  Similarly, mortgage interest for other than a primary residence, eliminated this year, was also a “preference item”, i.e., a loophole closed or reduced long ago by the AMT.


Case by case results and impact, of course, are varied, and there are nuances in many cases that cause unexpected and sometimes less than favorable results, but in the main, the broader brackets and lower rates yielded far more lower tax bills than the limited deductions drove higher.


Refunds were another story.  The tax withholding tables which drive your take home pay calculations were adjusted at the beginning of the year in order to get the tax reduction into your spendable income.  The result for many is you took your tax refund home with you every week during the year rather than in a lump sum refund in April.  While most financial planners will tell you a large refund is a result of less than prudent cash management (a refund represents an interest-free loan to the government) for many this is a form of passive savings that they count on realizing every April.  If this is your intent – you really do want a nice refund – one solution is to have your employer increase your withholding, or increase your estimated payments.


We had intended to do a fairly deep dive into the results of our own practice to get a more complete picture of the good, bad and indifferent.  This article, however, gives a very good and detailed summary of the results, and is in almost all respects entirely consistent with my impressions from the returns I prepared. 


If after reviewing this article, you have questions about your own tax return, give us a call (whether we prepared it or not), and we will try to give you a little better insight into your results.  And if there is something you can do to drive better outcomes next year, maybe together we can hone a little better strategy for you.  We're looking forward to hearing from you.

[1] Source: 

This commentary is for general information only and is not intended to provide specific advice or recommendations for any individual. You should discuss any investment decisions with your financial advisor. Income Tax services provided by DFS Advisors, LLC are conducted as an outside business activity separate and distinct from our relationship with LPL. LPL Financial does not provide tax advice or services.