Latest news with #middleincome
Forbes
a day ago
- Business
- Forbes
Everything Parents Need To Know About The 2025 Child Tax Credit Changes
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. The Child Tax Credit is getting another update in 2025 under the new One Big Beautiful Bill . While it doesn't match the expanded benefits from the 2021 pandemic relief, the credit continues to provide significant support, particularly for middle-income families facing rising costs. The 2021 American Rescue Plan temporarily increased the Child Tax Credit to $3,600 per child under age 6 and $3,000 per child aged 6 to 17. It also made the credit fully refundable, allowing families who didn't owe any federal income tax to receive the full amount. Under the new policy, the credit reduces to $2,200 per child under 17—close to what it was prepandemic. While there's no extra boost like before, it's still a nice tax break. The good news? More families can now qualify for the tax credit thanks to higher income phaseout thresholds. The credit now begins to phase out at: $200,000 for single filers $400,000 for married couples filing jointly Before 2021, phaseouts kicked in at much lower levels—$75,000 and $150,000, respectively. This is a welcome change for middle-income families, especially those in high-cost areas, who may have previously phased out under the old limits. Claiming the Child Tax Credit is pretty straightforward; however, you want to make sure you include the correct forms so you don't miss out. Use IRS Form 1040 to file your federal taxes to file your federal taxes Attach Schedule 8812 , the form for the Child Tax Credit, to claim the credit , the form for the Child Tax Credit, to claim the credit File by the tax deadline, which is April 15, 2026 Before filing, make sure you meet the new requirements from the IRS, as missing or inconsistent information could hold up your credit. Here's what the IRS now looks for from the qualifying child: Age. The child must be under 17 at the end of the tax year. The child must be under 17 at the end of the tax year. Relationship. The child must be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or even a grandchild, niece or nephew. The child must be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister or even a grandchild, niece or nephew. Support. You need to be primarily supporting them; the child can't provide more than half of their support during the year. You need to be primarily supporting them; the child can't provide more than half of their support during the year. Residency. To qualify, the child must have lived with you for more than half the year. To qualify, the child must have lived with you for more than half the year. Dependency. You need to claim them as a dependent on your tax return. You need to claim them as a dependent on your tax return. Filing status. The child cannot file a joint tax return with someone else unless they are seeking a refund of withheld or estimated taxes. The child cannot file a joint tax return with someone else unless they are seeking a refund of withheld or estimated taxes. Citizenship. The child must be a U.S. citizen, U.S. national, or U.S. resident alien. The child must be a U.S. citizen, U.S. national, or U.S. resident alien. Social Security number. The child needs a valid Social Security number to work, and it must be issued before your tax return is due (including any extensions). If you have unpaid federal taxes, the IRS can reduce your Child Tax Credit to cover what you owe. So, if you're behind on payments, you'll want to clear those debts before filing to avoid losing part of your credit. Even if your tax bill is low or zero, you could still receive the Child Tax Credit. Because part of the credit is refundable, families may receive up to $1,700 per child, providing crucial support regardless of tax liability. Start by gathering your paperwork. Make sure you have your child's Social Security number and any custody or relationship documents. In addition, check whether your annual income falls under the phaseout limits, so you have a better idea of what to expect. If you owe back taxes, it's best to deal with it now than put it off. If you don't owe anything, you can begin organizing your documents and preparing for tax season. And if all this feels overwhelming, getting help from a tax professional or using reliable tax software can make the process easier. Here are some of the best tax software options available. The 2025 Child Tax Credit isn't as big as the pandemic-era boost families got in 2021, but it is still a relief for many, especially middle-income households. With higher income limits, more families can get the full credit this year. That said, the IRS is enforcing stricter eligibility rules. Make sure your paperwork is in order and address any unpaid taxes that could hold up your claim.
Yahoo
5 days ago
- Business
- Yahoo
High income taxpayers in California and New York set for a SALT windfall in 2026
The Republican party is heralding its new tax legislation as a win for middle income Americans. But the most substantial tax savings in the bill is reserved for wealthy individuals across the country—and particularly in high-tax states like California and New York. That's because the legislation increases the deduction level for state and local taxes, also known as SALT. This allows federal taxpayers who itemize their deductions to fully deduct state and local income taxes as well as property taxes, and is most beneficial to wealthy taxpayers in states with a high cost of living and high tax rates—the ones who are in position to elect for itemizing over the standard deduction. To wit: while only 7% of taxpayers earning under $200,000 itemized deductions in 2022, 38% of taxpayers earning over $200,000 did, according to the Bipartisan Policy Center (BPC). Under the 2017 tax bill passed under the first Trump administration, a cap was officially put on this deduction for the first time, limiting what taxpayers could deduct to $10,000. The cap is quadrupled under the new law, and now stands at $40,000. It begins to phase down for taxpayers making over $500,000. Various analyses find that taxpayers in California, Illinois, New Jersey, and New York stand to benefit the most: They account for 40 of the 50 top congressional districts affected by the cap. And 13 of the top 15 are located in just California and New York, per BPC. The old cap primarily affected taxpayers making over $200,000 per year; those earning less than that 'typically don't pay enough SALT to be significantly affected by the $10,000 cap,' notes BPC. In fact, the bottom 80% of earners would see no benefit at all, according to the Tax Foundation. The map below shows the difference between the average SALT paid and the $10,000 cap in different Congressional districts, according to BPC's data. The greater the difference, the more the households can benefit from the increased cap. What to do about the SALT cap became one of the more contentious aspects of passing the bill, with Republican politicians from high-tax states like New York and California pushing for it while those representing lower-tax states blasting it as a giveaway for the rich. It's also one of the most costly aspects of the new legislation, which attempts to pay for its many tax breaks by cutting funding to Medicaid and food stamps and will still add over $3 trillion to the national debt. Increasing the SALT cap adds $180 billion to the debt over the next 10 years. For all that, the provision last only through 2030, like many of the individual tax changes in the law, including new measures to limit taxes on tips and overtime. 'It's increased relief, but it is temporary,' says Marc Gerson, member at Miller & Chevalier and former majority tax counsel for the House Ways and Means Committee. 'And so it's something that Congress will have to revisit.' How the SALT cap phases out One aspect of the new law high-income households should heed: the $40,000 SALT cap begins to phase out for those earning $500,000 and is reduced to $10,000 for those earning $600,000 and above. 'The provision mandates a reduction of the SALT deduction by 30% of income greater than $500,000,' notes Ben Rizzuto, wealth strategist at Janus Henderson Investors. 'The phaseout of the deduction could mean that if an individual's income increases by $100,000—from $500,000 to $600,000—their taxable income could increase by $130,000.' Both the cap and the income thresholds will increase by 1% yearly through 2029. Still, Rizzuto says it makes sense for wealthy taxpayers 'to carefully plan around income changes' or increases through Roth conversions or IRA distributions, given the phase out. He also advises taxpayers to discuss how these tax law changes will affect their tax situation and overall financial plan with their financial advisor or accountant. Rizzuto adds that the increased SALT cap means wealthy taxpayers have a higher probability of a bigger tax refund next year, assuming their income and other deductions will not changed significantly. If you will qualify, he says it might make sense to change your withholdings now. 'The question taxpayers need to answer when it comes to withholdings, if they expect a tax refund, is whether they'd rather have their money now or later,' he says. 'If they want it now, then decreasing withholdings to receive more in their paycheck would make sense and allow them to utilize those funds for other financial goals. If they'd rather receive a refund from the IRS, then leaving withholdings as is would make sense.' SALT workaround All that said, the legislation preserves a workaround for some high earners that would effectively eliminate the cap altogether. Called the pass-through entity tax, or PTET, many states allow pass-through owners and partners to avoid the cap. That benefits people like car dealers, law firm partners, doctors, and other owners of professional service firms (but not their employees). Essentially, this allows these taxpayers to pay state tax at the entity level on their pass-through income, rather than the individual level, and in doing so avoid the federal cap. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Washington Post
27-06-2025
- Lifestyle
- Washington Post
Carolyn Hax: ‘Tight budget' takes on new meaning with friend's facelift
Dear Carolyn: I have a friend who claims she can't do activities because she works in a middle-income profession and is on a tight budget. We are both in our 50s, are in the same profession and make about the same. When she gets asked out to do simple activities, she says she can't afford it and asks that other people pay for her. When I treat her to dinner or an activity, she never reciprocates and doesn't even tip vendors. She accepts gifts of money, plane tickets, sporting gear, clothes, etc., from interested suitors. When she travels to meet family, they have to pay all her expenses.
CTV News
21-06-2025
- Business
- CTV News
GTA elementary school teacher making 120K a year says that she ‘had better expectations' for her finances. Here's what happened
Christine Miller has been a Grade One teacher with the Peel District School Board for the better part of a decade and while she earns close to $120,000 annually, she says she is living paycheck to paycheck. Miller belongs to a rising number of middle-income households making up to $125,000 a year that are at risk of being squeezed out of the region, according to a report released by Civic Action this week. Many members of the group, like Miller, have healthy salaries well over the median income for Toronto but are still struggling to stay afloat and have essentially become 'the invisible poor,' Civic Action says. Miller, 56, lives alone in a one-bedroom 650-square-foot condo in Etobicoke, which she bought for $505,000 in 2019 with some help from her mother for the downpayment. Miller says she bought at a time when borrowing rates were low but the payments on her variable rate mortgage spiked as the Bank of Canada began to hike its key overnight lending rate in response to runaway inflation in 2022. While she loves her neighbourhood, with its lush gardens and the lake right in view, she says it has become increasingly difficult to pay her mortgage each month, even with a series of recent rate cuts from the central bank. 'I'm up to my eyeballs in the mortgage,' Miller said. 'When the rates went up, I was paying over $3,000 a month.' Miller says that she was already directing a significant portion of her income to her mortgage but is now spending more than half of everything she earns on her condo after taking a leave of absence to care for her 94-year-old mother and temporarily replacing her salary with employment insurance benefits. On top of her living expenses, Miller says her monthly bills also include car insurance, phone and internet, and groceries, for a rough total of $1,500. 'I don't have cable TV, so I watched the Stanley Cup on TikTok. I don't buy clothes, I don't go on trips,' Miller said. 'I have to get my hair cut every six weeks, but I don't go to a gym, I don't do my nails, I don't buy clothes unless I absolutely have to.' While Toronto's housing market has softened significantly in recent years, a report released by in April that you still need an annual household income of more than $217,000 to be able to afford an average-priced home in the city. Not having the means to be able to spend on anything outside of necessities really, Miller says she feels disappointed with where she's at. The elementary school teacher compared her life to what it was like for her mom and aunt, as they were also educators. She shared how her parents owned a four-bedroom home on a one-acre lot with a pool in the yard, had a vacation home in Florida and had the ability to help Miller throughout university. 'I had better expectations for where I would be at this point in my life and earning what I earn—because I'm earning close to $120,000 a year—I'm at the top of the pay scale,' Miller says, adding today's economy and her divorce set her back financially. 'I am not going to recover from that hit, like, I won't.' 'Prevention is better than cure' Miller is just one of many middle-income workers strapped on their monthly bills. Earlier this week, CTV News Toronto reported on CivicAction's housing crisis report which highlighted the struggles middle-income households in the Greater Toronto and Hamilton Area face as they don't qualify for traditional housing supports and are often forced to choose between lengthy commutes or out of reach living expenses. About two dozen readers from households making between $40,000 and $125,000 annually wrote into CTV News Toronto sharing what their day-to-day life is like working in various industries, from healthcare to policing to the skilled trades. Some wrote in sharing how they frequently commute to Toronto from places like the Niagara Region or Oshawa, incapable of finding work close to home, while some working parents described the challenges they face trying to provide their children with adequate daycare or a stable home. When asked whether she was surprised to hear the responses, CivicAction CEO Leslie Woo says their stories show what's currently at stake for the region. 'The situation is here and we're already paying a serious price, and every day that goes by that we're unable to sort of drive better collaboration to find solutions we're falling further and further behind,' Woo said. In CivicAction's report published Tuesday, researchers said that essential workers—those who make the region run, like nurses and teachers, for example—are increasingly being squeezed out of the GTHA because they're reaching their financial breaking point. The fact that these middle-income workers cannot qualify for housing supports—despite spending between 43 and 65 per cent of their monthly income to cover their mortgage or rent—should, in a way, act as a red flag for policy makers, Woo said. 'Our definitions of what and who qualifies for the kinds of supports are inadequate. It also means that how we're thinking about and the sort of old ways of providing support for those that are in need are also inadequate,' Woo said. It goes beyond empathy and pity, Woo says, as systemic adjustments need to be made to curb the long-term risks that can hinder the GTHA—from economical to social and even environmental standpoints. For its part, the city says it is 'aware' of the various pressures Torontonians are facing, from housing affordability to the rising cost of living, adding that it has implemented several policies to assist residents with 'varying income levels to ensure Toronto's long-term vibrancy, livability, and diversity.' A spokesperson for the city told CTV News that Toronto`s budget for 2025 including money to expand school food programs, freeze TTC fares and waive development charges to accelerate the construction of 6,000 rental units. The city says it also introduced a new action plan for the local economy to create quality jobs and has a goalpost of delivering 65,000 new rent-controlled homes by 2030, including 41,000 affordable rentals. Woo hopes policymakers—from all levels of government to employers and non-profits—act swiftly to address the region's housing issues. 'There's an old adage, prevention is better than cure,' Woo said. 'There are a lot of people for whom we could put preventative measures if we act swiftly.' Miller, however, isn't so sure that relief is on the horizon. 'It's like, you're working just as hard, you followed all the steps, right? You're making the money, and you're making the money, but it's not panning out in your life, in my life,' Miller said.
Yahoo
19-06-2025
- Business
- Yahoo
Q&A on Florida's affordable-housing Live Local Act: What is it and why is it controversial?
In 2023, the Florida Legislature approved Senate Bill 102, known as the Live Local Act, and Gov. Ron DeSantis signed it into law. The next year, lawmakers revised the legislation. Further updates to the act were approved by the legislature in the spring of 2025, and they will go into effect July 1. The Live (pronounced "liv") Local Act is intended to address the state's growing housing-affordability crisis by encouraging development with significant land-use, zoning and tax benefits. It makes various changes and additions to affordable-housing-related programs and policies at both the state and local level. It also requires certain information be made available on local government websites. However, things have not always run smoothly for the statewide housing strategy. Among the key criticisms: The plan has not reached those most in need; that it has the potential for developers to prioritize tax incentives over affordability; and that it intrudes on local authority and planning efforts, infringing on the surrounding community. Here are some key provisions and everything you need to know: The Live Local Act has a provision that gives developers a 75% exemption on property taxes when they build rental housing targeted for middle-income families — those with incomes that fall in the range of what a family with 80% to 120% of the area median income of the community would be able to comfortably afford. This group is sometimes called "the missing middle." There must be more than 70 affordable units in a development to qualify for this tax break, and only the affordable units would qualify. So, for example, in a 200-unit project with 75 affordable units, only the portion of property taxes covered by the 75 affordable units would get the tax reduction. Under a separate provision, developers can get a 100% property-tax exemption for qualifying developments with units targeted to families with incomes that are less than 80% of the area median income of the community. SPECIAL REPORT: Florida's Live Local Act wanted to spur affordable housing, but has it? In a training session on the act, Marisa Button, managing director of strategic initiatives for the Florida Housing Finance Corp., said this tax break provides "another tool in the tool belt of affordable-housing providers." There is a two-step application process to get approval for this tax break — going through the Florida Housing Finance Corp., then to the local county property appraiser. A governing board of a county, city or school district can opt out of the missing-middle property-tax exemption through a "supermajority" vote of at least two-thirds of the board. The board can opt out only if the geographic region it is in already has more affordable-housing units than the number of households at or below 120% of the area median income of the community — in other words, it has a "surplus" of affordable housing. More: Senator who championed Live Local Act says local governments must embrace it to work Among cities that now have a deficit of affordable housing — and are thus not eligible to opt out of offering the tax break — are the metropolitan areas that include Miami, Fort Lauderdale, West Palm Beach, Port St. Lucie, Fort Myers, Naples, Sarasota, Lakeland, and Ocala. There is no opt-out provision for the tax break for developments targeted to families with incomes that are less than 80% of the area median income. Local governments also have the option to enact an ordinance providing property-tax exemptions to certain affordable-housing development of 50 or more units that set aside at least 20% of the units as affordable to household at or below 60% of a community's median income. The exemptions apply only to the property taxes for the affordable units. The tax break can be up to 75% if fewer than 100% of the units are considered affordable, and up to 100% of all the units are considered affordable. Jacksonville and St. Petersburg were among the first cities to adopt such programs. There are provisions for more flexible zoning for affordable housing in areas within a county or city that had been designated for commercial, industrial and mixed-use development. For example, this includes easing of rules on building height, under which a residential building can be built to the highest currently allowed height for a residential or commercial building in that county or city that is within a mile of the proposed development site, or three stories, whichever is higher. There also is more flexibility related to site use (the category of development allowed on a parcel), as well as to density standards (the number of housing units allowed per acre). These provisions override the local government's height, zoning and density regulations for a specific parcel of land. To qualify for these zoning rule exemptions, a developer must set aside at least 40% of the project's rental units for affordable rental housing geared to households earning no more than 120% of the area median income for at least 30 years. Such projects would be administratively approved, with no action required by county or city governing bodies, such as a zoning board or a city council, as long as the development otherwise complies with the local government's comprehensive plan. The Live Local Act assures full funding of two long-established state housing programs through the Sadowski Trust Fund program, which gets revenue generated through a portion of documentary stamp taxes collected on real estate transactions. These housing programs are the State Apartment Incentive Loan or SAIL program, which provides low-interest or no-interest loans for development of affordable housing; and the State Housing Incentive Partnership or SHIP program, which deploys funds to Florida's 67 counties and 55 eligible municipalities for various housing programs. The act also codifies the state's Hometown Heroes Program into state statute. This program provides down-payment and closing-cost assistance to eligible first-time homebuyers who are Florida residents and work for a Florida-based company. Counties and cities must compile an inventory of publicly owned land that could be appropriate for affordable-housing projects, if such land exists in the community. The resulting list of those properties must be posted on the local government's website. Property-tax exemptions on the value of the land are provided on land owned by a nonprofit organization and leased for a period of 99 years to predominantly provide affordable housing to households at or below 120% of a community's median income. The Florida House on April 30 and the Florida Senate on May 1 unanimously approved a series of changes to the Live Local Act, as part of Senate Bill 1730. They would take effect July 1, unless vetoed by DeSantis. In analysing the legislation, Kody Glazer, chief legal and policy officer for the Florida Housing Coalition, believes the amendments are generally beneficial for spurring efforts to build more affordable-housing projects. Glazer said he believes the most significant change in the bill is that it clarifies that the act applies to properties within planned unit developments, which sometimes also are known as master planned communities. Among other changes, the measure offers more flexibility for approval of affordable-housing projects on parcels owned by religious institutions. This type of provision is considered a "Yes In God's Backyard," or a "YIGBY," reform. Such reforms are becoming more common across the country as a way to unlock land owned by religious institutions to address local housing shortages. The bill also prevents local building moratoria that have the effect of delaying the permitting or construction of a Live Local Act land-use project unless: The moratorium lasts no more than 90 days in any three-year period after a local assessment of the jurisdiction's need for affordable housing. The moratorium is imposed or enforced to address stormwater or flood water management; to address the supply of potable water; or due to the necessary repair of sanitary sewer systems, if such moratoria apply equally to all types of multifamily or mixed-use residential development. The amendments also have some added restrictions. For example: They create more building height limits for sites in certain historic parcels. They also exempt the Wekiva Study Area in Central Florida and the Everglades Protection Area from Live Local Act land-use mandates. Dave Berman is business editor at FLORIDA TODAY. Contact Berman at dberman@ on X at @bydaveberman and on Facebook at This article originally appeared on Florida Today: Live Local Act: Questions and answers
