New York Estate Planning & Elder Law Blog
The $1.5 trillion tax bill passed last year will likely have far reaching consequences on millions of seniors across the country, some good and some bad. While only time will truly tell how things will shape out, there are a number of areas many tax lawyers and elder law attorneys believe senior citizens and retired persons are likely to see an impact to their finances.
For the most part, the overwhelming majority of elder Americans will not see an increase to their taxes because most senior citizens have incomes that rely on Social Security which for the most part is not taxable at lower levels of income. Furthermore, because most older households do not itemize deductions they are not likely to see an impact because the new tax laws target taxpayer who have major itemized deductions on their taxes, particularly in states where there are high state and local income and property taxes.
The one proposed change to itemized deductions that did not make it into the final draft of the 2017 tax bill was the elimination of deductions for medical bills, a major deduction that would have had far reaching effects on senior citizens. An outcry from AARP, the National Academy of Elder Law Attorneys, the public, and other advocacy groups was successful in preventing any changes to itemizing medical bills and actually expands it for two-years.
Although last year’s tax bill will not have a tremendous repercussions on elder Americans, the law could have indirect consequences that could be negative for some. In particular, the tax bill’s removal of the individual mandate of the Affordable Care Act (ACA) could end up increases the price of healthcare overall, leaving many seniors in financial dire straits. Those aged 55-64 often have high health costs, meaning some could be less economically secure and less healthy as they enter traditional retirement age, as a result.
Additionally, because the law caps deductions on state and local taxes at $10,000, states may feel pressure to cut down on vital healthcare services like Medicare unless they are able to find a viable legal workaround. The declines in state revenues could also ignite calls for cuts to state and national entitlement programs that help millions of elders live more healthy and dignified lives. With less tax money coming into the federal government, the more some members of Congress may demand cuts to balance out the government’s financial shortcomings.