Why Your Income Taxes Could Rise in 2020
Why Your Income Taxes Could Rise in 2020
Can you believe you might be paying more in taxes in 2020? How is that possible? The Tax Cut and Jobs Act (TCJA) was supposed to reduce nearly everyone’s taxes, right? It’s true that the TCJA did cut federal income taxes for most taxpayers. However, that doesn’t mean state income taxes will always stay the same. To that end, according to a new report from the Tax Foundation, numerous states are planning to pass legislation aimed at increasing income taxes. From sports betting to online shopping, state legislatures are looking for ways to increase their revenues and overcome the changes from the TCJA.
Changes to Watch Out For
So with that in mind, what changes should you be on the lookout for in 2020?
Federal Tax Reform Conformation – Many state tax laws will change simply because state lawmakers will align their tax policies with the new federal laws. Most states require residents to follow federal definitions of taxable income and adjusted gross income when they start their own individual calculations for state taxes.
Online Sales – this has been an ongoing debate and last year, things changed when a Supreme Court decision made it possible for states to tax remote or online sales by retailers that don’t have a local physical location. Since that time, 34 states have already passed laws to tax remote sales and several other states are working on similar legislation.
No Sales Tax on Services – currently, there is no sales tax on services. When people purchase a product they pay a sales tax, in most states. But when they purchase a service there is no tax. And many states are working to make that permanent. According to the report from the Tax Foundation, “today, services comprise more than two-thirds of all consumption, meaning that the sales tax omits most of what people purchase.” And, “The current trend, seems to be one whereby lawmakers and voters resist efforts to broaden the sales-tax base.” If this trend continues, state lawmakers may be forced to create different types of taxes to make up for the lost revenue.
Sports Betting – another change that could be coming is taxing sports betting. Now that many states have made sports betting legal, policy makers are looking for ways to track and tax people’s winnings. However, currently, states cannot tax most online sports betting. Therefore, if state lawmakers go after legalized betting through casinos, many people who bet on sports could turn to online gambling, instead.
Vaping and Marijuana – now that more states have legalized marijuana, and other states might soon be joining the movement, state lawmakers are looking at ways to earn more tax revenue from the trend. Some states could pass and enforce a sales tax on marijuana, like other goods. However, in most cases, states will likely include an excise tax on the sale of marijuana. In addition, nine states currently tax vaping products. At this point, most states tax vaping material at a lower rate than tobacco, but that could change as more people begin to use these products.
So, the Tax Cut and Jobs Act did reduce taxes for most. But that means many state lawmakers are going to be looking for new ways to collect additional tax revenue.
We hope you found this article about “Why Your Income Taxes Could Rise in 2020” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
The vast majority of Americans get a tax refund from the IRS each spring, but what do you do if you are one of those who have received a tax bill? What do you do if you owe money to the IRS and can’t pay? The IRS encourages you to pay the full amount of…
How Some Big Companies Are Maximizing Their Tax Benefit There’s no question that the IRS is always looking for ways to get every penny they can from the nation’s taxpayers, whether they be individuals or businesses. On the other hand, many are also doing whatever they can to pay as little as possible, some, even…
Federal Government Still Facing Huge Deficit Does it seem like no matter how much money the federal government collects in tax revenue, they will still never have enough? For a lot of people the, answer is a resounding “yes.” The country’s Monthly Treasury Statement lends even more credence to that belief. What does the Treasury…
The IRS is Not a Bully You can poke a bully in the nose. This is the third installment of “The IRS is Not a Bully” series, identifying taxpayer concerns and the difficult position in which Congress puts the IRS. Namely, applying ever increasing pressure to operate in ways its founders never intended, until it’s…