Late last year, Congress passed the Tax Cuts and Jobs Act (TCJA). While we are in month three of this new tax regime, the impact is being felt by many already. Those living in high-income-tax and high-property-tax states may have prepaid their property taxes to bypass the deduction cap that went into effect in 2018. For those still earning a paycheck, you may have seen a more money due to the lowering of income tax rate brackets. Then there is the hard-to-measure impact that the tax new law has had on the financial markets.
AAII Weekly Survey Question
To get an idea of whether our readers are seeing any changes in their financial situation as a result of the Tax Cuts and Jobs Act, last week’s AAII survey question asked:
Thus far, has your financial situtation improved, worsened or stayed the same following the passage of the Tax Cuts and Jobs Act of 2017?
Here are the results:
In all, 2,079 readers participated in the survey.
The majority of our readers—55%—have not yet seen any change in their financial situation as a result of the new tax law.
Thirty percent of our readers have seen their financial situation improve as a result of the Tax Cuts and Jobs Act.
The remaining 15% of respondents said that their financial situation has worsened as a result of the new tax law.
Weekly Special Question
To get an idea of how exactly our readers’ financial situations may have changed as a result of the new tax law, last week’s special question asked:
In what way(s) has your financial situation changed following the passage of the Tax Cuts and Jobs Act of 2017?
Overall, we received 321 responses to the question. In general terms, nearly 45% of responses said that the new tax law has had a positive impact on their financial situation. Almost 36% of responses indicated that the new tax law has had a negative impact. Lastly, nearly 20% of responses say that the tax law, thus far, has not had an impact on their financial situation.
The biggest block of respondents—24%—said their financial situation has improved due to lower taxes, which in turn gives them more income.
Roughly 16% of responses to the special question say that the new tax law has had no impact on their financial situation.
Another 14% of responses say that they credit the continued rise in the stock market or companies increasing their dividends as a result of the new tax law.
Nearly 13% of responses say the Tax Cuts and Jobs Act has negatively impacted their financial situation because of few or capped deductions.
Here is a sampling of the responses readers offered regarding how their financial situation has changed due to the Tax Cuts and Jobs Act of 2017:
- “Can’t deduct interest paid on home equity loan and can’t deduct all of my state income tax or the real estate tax on my personal home.”
- “In a high-tax state like Oregon, I have lost over $25,000 in deductions.”
- “Increased cash flow and lower tax bill for the coming year. Also, see more optimism in the local shopping (consuming) world.”
- “Most investors have seen [the new tax law] as a positive and therefore they have been buying, which drives the prices up.”
- “When I take a position, I know what I am willing to pay and no more, I know my profit targets (3) and my maximum lost point. I, personally do not react to the Tax Cuts and Jobs Act. I just react to the market as a result of others’ reactions.”
- “My monthly pension check increased. I am anticipating less complicated Federal income tax as now I will take the standard deduction. I am also expecting a Federal tax cut.”
- “With the increased standard deduction we don’t see the need to keep nearly as many records as before.”
Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at www.aaii.com/memberquestion.