With the skyrocketing cost of housing, prescription drugs, and childcare, families in the 45th District can’t afford to pay a single extra dollar in taxes.
The Trump tax bill enacted last year capped the deduction for state and local taxes (SALT) at $10,000 a year, meaning many families may end up paying taxes twice on the income they earn. Before the Trump tax bill, Orange County families were able to fully deduct property taxes and other state taxes from their income – meaning it was untaxed at the federal level. That changed last year with the Trump tax overhaul.
Estimates indicate that 37% of taxpayers in the 45th district use the SALT deduction, with an average deduction of $18,200 per household that used the deduction. By capping the deduction at $10,000, many middle-class families may end up with higher tax bills at the end of the year. What’s worse, the Trump tax bill imposes a marriage penalty. While unmarried individuals can each file for $10,000 worth of SALT deductions – totaling $20,000 worth of deductions – a married couple can only claim $10,000.
More than 42,000 residents in the 45th District will no longer be able to deduct their full property taxes from their federal tax bill. The SALT deduction is so common-sense that it has been part of the U.S. tax code ever since it was established in 1913.
Congresswoman Porter will continue fighting to restore the SALT deduction, which helps thousands of Orange Country families. She has already backed three bills to repeal the harmful limits on SALT deductions, including two bills that have bipartisan support.
At the request of Congresswoman Porter, the House Committee on Oversight and Reform examined how the Trump tax law hurts homeowners in the 45th District. The report found that over 27,000 homeowners with existing home equity loans will not be allowed to claim full home equity interest deductions as they did in the past, and over 42,000 homeowners will no longer be allowed to deduct their full property taxes.
Read the full report HERE.
Stories from CA-45 Families
Below, read the stories of 45th District families that have felt the squeeze of the Trump tax plan:
Jaimee, Portola Hills: "My husband is a teacher, and I work from home. We both claim 0 to have more taxes taken out so our refund can help pay the bills during the summer months when my husband is not receiving a paycheck and so we can take a family vacation. This year, because of Trump's tax plan, we owed and addition $1,500 and my husband will have to find a job this summer--which means also paying for childcare. We don’t know how we’ll make it through this year."
Erika, Tustin: "I am a social worker, and my husband owns a small business. We claim 0 married. Ever since we bought our house, we typically get $10,000 in refunds, which we use on house projects, vet and medical bills (I am also a cancer survivor), etc. This year we owed $4000. Nothing else changed. We are the working middle class!"
Melissa, Irvine: "I'm a teacher. Not only was I not able to claim my full mortgage interest, I was no longer able to claim work expenses. Professional journals, memberships, and the large amount I spend on items for my classroom counted for nothing on my federal taxes. This year I owed federal taxes for the first time in as long as I can remember. Many of my colleagues have the same story. I didn't attend a work-related conference because I knew I wouldn't be able to deduct the cost of travel to/from the location. There are items I typically buy my students and classroom that I chose to forgo purchasing last year due to the new tax laws. Teachers need to be able to deduct classroom and professional expenses. The $250 Educator Expense is only a drop in the bucket."
Rachel, Laguna Hills: "We owe $4700 this year and had a return last year. I prepaid the first installment of property taxes at the end of 2017 or it would have been $3700 more. We own a small business but the corporate tax cuts really don’t make much of a difference to us even though we are an S Corp. the cap on SALT on top of elimination of personal deduction is over taxing middle class homeowners in Orange County. Our taxable income is about $150k which places us middle class for California. We employ 10 people and this makes it difficult for us to grow our business as we are wary of our personal financial situation moving forward."
Susan, Irvine: "Many of us in CA-45 are retired and have worked to fund and manage our retirement income. With the new tax law, our income taxes are increasing by $5,000 or so. Others we know, who have changed nothing regarding income/deductions, etc., have faced a total loss of refund, and a tax bill nearing $10,000 basically due to the loss of SALT and other deductions. This is very hard on retired people, who don't have the time or opportunity to alter their financial situations."
More on Tax Fairness
WASHINGTON – Congresswoman Katie Porter (CA-45) led a bipartisan group of 24 colleagues demanding that Speaker Nancy Pelosi and Minority Leader Kevin McCarthy prioritize repeal of the State and Local Tax (SALT) deduction cap, which has caused many Orange County families to see their 2018 taxes go up. The SALT deduction cap, which was enacted as part of the Trump tax plan, limits the amount of state and local taxes families may deduct from their federal taxes.
WASHINGTON – Congresswoman Katie Porter (CA-45) today introduced a bipartisan bill with Republican Congressman Kenny Marchant to permanently lower the threshold for deducting medical expenses from federal taxes to 7.5% of income. Without this legislation, Orange County families currently deducting medical expenses could see their taxes increase next Tax Day.