President Trump’s tax plan nearly eliminates the regional cost of living adjustment for Federal Income Taxes
The current tax code has an intended or unintended regionalization of tax brackets. Think of it this way. If you earn $100,000 in Massachusetts where the average price of a home is $208 per square feet, so a 2,000 square foot home is $ 416,000 and you are also enjoying being in one of the top 10 states for median income taxes and real estate taxes paid per person. You are paying much less on that $100,000 that someone in Iowa where the average price of a home is $ 109 per square feet, so a 2,000 square foot home is $ 280,000 and median income taxes and real estate taxes are much lower as well.
You need to earn more in Massachusetts than Iowa to enjoy the same lifestyle
The current tax code helps balance this by allowing you deduct Home Mortgage Interest, Real Estate Taxes and State Income Taxes on your Federal Income Tax Return
The removal of any or all of these deductions will reduce or eliminate this cost of living adjustment effect.
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