Taxpayers Should Beware the Costly SALT Cap Phaseout Zone
Trouble is coming, however, and it lies in the SALT Cap Phaseout Zone. The problem arises when the effective marginal tax rate on their next dollar of income increases from 32% to 41.6%, which they will discover next April. Here's how this happened.
High-earning residents of New York, New Jersey, California and other high-tax locales are tempted to cheer now that Congress has raised the cap on state and local tax deductions. Ever since the Tax Cuts and Jobs Act capped these deductions at $10,000 during President Trump's first term, politicians from high-tax states have fought to undo it.
They've now achieved a partial victory: The One Big Beautiful Bill Act raises the cap to $40,000—at least temporarily. But hold the champagne. This relief comes with a hidden tax hike.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Post
6 minutes ago
- New York Post
Trump is right to move up his too-generous peace deadline for Putin
Kudos to President Trump for realizing that his 50-day deadline for Vladimir Putin to reach a peace deal with Ukraine was far too generous — and wholly unnecessary. On Monday, the prez told reporters he's giving the Kremlin just 10 to 12 more days to agree to a cease-fire — or face real consequences. 'There's no reason to wait' the full 50 days before pummeling Russia with sanctions, potentially including a whopping 100% tariff on countries that import Russian goods, Trump declared. Advertisement He's right. As we've pointed out, his original deadline of Sept. 2 just gave Russia more time to stack up more dead bodies. Putin's goal was never peace; it is and has always been the total obliteration of Ukraine. Mad Vlad has openly operated in bad faith, telling the president what he wants to hear in one-on-one calls and then unleashing hell on Ukrainians right after. Advertisement That was exactly Putin's response to Trump's original 50-day deadline: Hours after the threat, Russia hit civilian sites in Ukraine. The message was clear: You keep giving me more string, and I'll keep stringing you along. Moscow has played tough, with one top Russian official brushing off Trump's sanctions threat as 'a theatrical ultimatum.' Advertisement But the Kremlin should worry; Russia's economy is a house on wobbly stilts. Its population is shrinking, inflation is skyrocketing and Putin has poured at least 40% of the national budget into his war machine, even as his people struggle to buy basic goods. Russia's Minister for Economic Development Maxim Reshetnikov is warning that the country is facing a recession. Meanwhile, China has been propping up Russia since the start of the war, buying hundreds of billions in goods and shipping in products of its own. India, too, imports Russian oil. Advertisement The threat of steep tariffs on these countries could get them to do business elsewhere. And that could deal a devastating blow to Russia. It's that logic that has fueled not only Trump's secondary-sanctions threat but a bill by Sen. Lindsey Graham that would slam buyers of Russian oil with a 500% tariff. Fact is, if Putin has his way, the war won't be over until Ukraine is entirely under his control. And hundreds of thousands more lives are lost. It's long past time for the West to ratchet up the pressure and make the war too costly for Putin to keep it going. Trump has no choice but to make the Russian strongman feel some real pain. And now's the time to do it.
New York Post
6 minutes ago
- New York Post
Trump's trade wins shock the experts — who are blind to business reality
If America is in the midst of a trade war, the question we have to ask is: Are we tired of winning yet? President 'Donald Trump reaps $50bn tariff haul as world 'chickens out,'' reads the Financial Times headline. 'Only China and Canada have retaliated against US president's tariff war,' its subhead adds. 'In the Trump-dominated global economy, the US gets plenty but gives nothing in return,' reads a rueful post on X from Axios — another publication with an upmarket readership — promoting an article titled, 'Trump trade deals prove access to the US still matters above all else.' Populist publications have a different take on Trump's spate of trade victories. 'Trump's trade deal bloc — let's call it The Free World — now encompasses 57% of global GDP . . . 40% of total global trade in goods,' and '18% of the world's population,' according to Breitbart's John Carney. The president has only been in office six months, and his tariffs haven't even been in place that long, but already the results are undeniable. At a time when there otherwise seems to be no end to federal deficits, Trump's trade policy put the federal government in the black for the month of June, with a $27 billion surplus — and, as it happens, about $27 billion in tariff revenue. It's one thing that Trump so often surprises political opponents who underestimate him at election time and can't understand the root of his appeal. What's more remarkable is Trump seems to defy the very laws of economics — or rather, the law as laid down by economists. Other social sciences have lately lost credibility thanks to a 'republication crisis' that shows how the results reported in leading journals of psychology and other fields all too often fail to be repeated when experiments are conducted anew and data are re-examined. Every morning, the NY POSTcast offers a deep dive into the headlines with the Post's signature mix of politics, business, pop culture, true crime and everything in between. Subscribe here! Will the economics profession — whose mainstream is fervently in favor of free trade and is convinced tariffs are madness — face a similar reckoning for getting this test wrong? Trump can do things the economists say can't be done because he approaches trade the way he conducts his real-estate business: It's a negotiation, and leverage is what counts. Precisely because the United States has such an enormous trade deficit with the rest of the world — amounting to more than $918 billion in 2024 — other nations depend on access to our market as an outlet for their goods. The size and wealth of the American consumer base is unmatchable, and countries that get cut off from it can't easily make up the difference by selling more goods and services somewhere else. Whole industries in Europe and Asia would collapse without access to the American consumer. Trump is willing to give them access — for a price. Instead of using punitive tariffs to exclude foreign goods altogether, Trump is willing to strike a deal with anyone to allow goods to be sold in America at a price that makes the trade worthwhile for Americans and foreign companies alike. The hitch: The deal must be on terms favorable for American workers and industry. The president's arrangement with the European Union levies a 15% tariff on most EU goods — but that's peanuts compared to the 30% Trump was threatening if Europe didn't cooperate. The deal calls for new European investments of $600 billion in America, as well as for EU members to buy more energy and military equipment from us. The 15% tariff is higher than what European producers were paying before Trump returned to the White House — high enough that American producers will get some protective advantage, but not so high that foreign companies won't be able to compete. Start your day with all you need to know Morning Report delivers the latest news, videos, photos and more. Thanks for signing up! Enter your email address Please provide a valid email address. By clicking above you agree to the Terms of Use and Privacy Policy. Never miss a story. Check out more newsletters That's crucial because competition is what keeps prices down for American consumers. Foreign firms can't easily 'pass on' a tax on their goods — which is what a tariff is — to the Americans who buy their products when those same Americans can choose from domestic producers instead. The modest protection a 15% tariff affords gives more investors at home a reason to put their capital into American companies — which is good for our workforce and consumers alike. It means more jobs and more goods; more money in Americans' pockets and more stock on the shelves, which keeps prices down. There's risk in all this, but the upside opportunity is much greater, as entrepreneurs here and abroad recognize. For the Europeans, it's a no-brainer: The American market is so rife with profit possibilities that a 15% access fee is a very modest cost of doing business. American businesses should recognize their opportunity as well — they're native to a market the entire world is desperate to be in, and they should use that advantage to the fullest, investing at home and making the sales that foreign firms are so eager to make here. In this trade war, all Americans are winning — except, perhaps, the overeducated prisoners of the Ivory Tower. Daniel McCarthy is the editor of Modern Age: A Conservative Review and editor-at-large of The American Conservative.
Vox
7 minutes ago
- Vox
Trump's new EU trade deal, briefly explained
President Donald Trump shakes hands with European Commission President Ursula von der Leyen as he announces a trade deal with the EU on July 27, 2025, in Turnberry, Scotland.This story appeared in The Logoff, a daily newsletter that helps you stay informed about the Trump administration without letting political news take over your life. Subscribe here. Welcome to The Logoff: The US and the European Union have arrived at a new trade deal, just days before President Donald Trump's threatened deadline to impose substantial new tariffs. What's in the agreement? Only the broad strokes of the deal have been announced so far, but it sets a new tariff rate of 15 percent on many imports from the EU, half the 30 percent rate that had been threatened. It also includes a promise of mutual tariff-free trade on some products, including aircraft and some generic drugs, and a European commitment to buy $750 billion in US energy over the next three years. Other points are still under negotiation, according to European Commission President Ursula von der Leyen, including whether European wine and other spirits will receive an exemption from the 15 percent tariff. How is Trump's trade war faring elsewhere? Earlier this month, Trump sent a new round of tariff demand letters to US trade partners, with a new deadline of August 1 (this Friday) to reach a trade deal and head off drastic tariffs. Since then, the US has reached a number of new agreements, including a deal with Japan last week — but many more are still outstanding. Among those is a deal with China, which negotiators met to discuss on Monday; a mutual suspension of tariffs between the two countries is set to expire on August 12, but is likely to be extended an additional 90 days as talks continue. The Logoff The email you need to stay informed about Trump — without letting the news take over your life. Email (required) Sign Up By submitting your email, you agree to our Terms and Privacy Notice . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. What else should I know about the tariffs? Hovering over all Trump's tariff threats and trade deals is the question of whether any of this is legal. One court, the US Court of International Trade, already ruled against the tariffs in May; now, an appeals court will hear the case on Thursday, and it will likely wend its way to the Supreme Court after that. And with that, it's time to log off… I greatly enjoyed the latest entry in my colleague Benji Jones's unofficial 'wildlife motion cameras' series, about artificial watering holes in the jungles of Guatemala (and don't miss his earlier piece, about animals along the US-Mexico border, here).
