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When taxable wages are greater than social security wages, it could be one of several types of pay: bonus such as a reenlistment bonus or medical specialties, or other bonuses flight pay incentive pay for doctors, submarines or other specialties with combat pay: taxable wages are lower than social security wages

When congress first started drafting the new tax law, almost all itemized deductions were taken away (only charities and maybe mortgage interest left I think). The higher standard deduction was supposed to make up for it. (At that point in time no one realized that the loss of exemptions would eat up the increased sd.) Then the lobbyists came out in force, they needed this, needed that. Congress was in such a rush to give the American people a "big Christmas present" that they just gave the loudest voices what they wanted. The result is that most deductions were put back in and, instead of being revenue neutral, the tax cut is adding trillions to the deficit. Misc 2% deductions and casualty and theft losses were the only things dropped, although taxes and mortgage interest were limited for some taxpayers while contribution limits were raised. The point is that the intent was to do away with most itemized deductions, but the result was to put most things back in in haste. I live in a high tax state that is suing the feds over this. CT tax is based on federal AGI, itemized deductions don't count. The state's participation in the suit therefore must center on state residents missing out on their federal taxes because they pay so much in state taxes. Some states that do allow itemization can and have upped the amount of state taxes their residents can deduct. I'm with Jack on this one. These states are claiming that the federal gov't is harming their residents, when the harm is coming from the states themselves that impose such high taxes on their residents.

While I agree with @Evan S. Golar that this AFFECTS the states, that is far different from the claim that it is an unConstitutional law because of state effects. Changes to bankruptcy law (authority given to the feds in Article I, Section 8 ) also affect the states - but that is a power given to the feds by the Constitution. All the states to be affected could decide to cancel their income tax immediately and instead impose a state sales tax to fund their operations. Or expand their lottery programs. Whatever. That is an area reserved for state control. The high-tax states could be said to have been subsidized by the feds all these years because they allowed state taxes to be deducted, in full, from income (for itemizers). Wasn't that the reason the no-income-tax states fussed until the IRS added state sales taxes in to the mix of what could be deducted? Because it wasn't "fair" to deduct income tax but not sales tax, when a state chose the latter method for raising funds? As for @Edsel's comments in his first paragraph - I happen to agree. The federal system has been subsidizing both high-income-tax states AND private home ownership. The original intention was to encourage home ownership and relieve some local tax burdens. But as is usual for any government program with social content, no matter how good (and pure) the intent, eventually it has the opposite affect from what was intended. Home ownership, because of the deduction for mortgage interest and property taxes, ultimately made it harder for people to buy, because prices increased. Remember when credit card interest was a deduction? When that went away, people started refinancing their houses to pay off their credit cards (turning short term fun like clothes and trips into thirty-year debt obligations), and we now have the task of teasing apart actual house (purchase or improvement) debt from what was used for the new car or the fancy vacation. Even the charitable deduction - yes it rewards people for being kind (by lowering the cost of so doing) but it also tricks people into thinking that the government should be involved (even obliquely) in a decision to donate to a charity. Hence the year-end "get your deduction!" drives every December. As for changes to the law in the future - what was it Mark Twain used to say? Something about Congress being in session means we're all in danger.... We can only be certain that the law WILL be changed. All other considerations are up for grabs.

This IS a state issue because the restriction in the amount a taxpayer is entitled to deduct for state income taxes and real estate taxes is greatly restricted, and will reduce the real estate values of taxpayers' homes. As well - unless the state legislatures act - it will increase the taxable income to the states (for those that follow the Federal format) by reducing the deductible real estate taxes on the state returns. THAT'S HOW it's a STATE ISSUE!!!!!!!!!!!!!!!!!

Not with my esteemed colleagues Jack and Catherine this time. I would agree that the very states involved are those with ridiculously high taxes with fat governments, but that is the very core of the issue. I would be happier if the new law denied the deduction for any taxes whatsoever than to ostensibly single out some states. Constitutional law notwithstanding, I'm sure nothing in the constitution allowed for picking and choosing which states to favor or disfavor with regard to treatment. I ought to be happy as a pig in slop. My state has no income tax. And I dislike governments in those states who delight in high taxes and fat governments determined to live off the public largesse. But fair is fair. Socially speaking, the even bigger losers in the new law are charities. One thing I've noticed consistently during my career: The govt has declared war on itemized deductions for 30+ years. The standard deduction has moved upward with the cost of living, and numerous times the standard deduction has been legislated upward by leaps and bounds. Add that to the number of deductions that have been disallowed (personal interest and ALL taxes prior to 1987, plus the fact that the 2% haircut was unheard of before 1986 code). I would estimate in 1980 that 85% of all taxpayers itemized, and the latest projections for 2018 indicate only 8% of taxpayers will itemize. And the future of itemized deductions? I am told by some that the $24,000 std deduction will NOT increase with inflation, and that after 2023 the std deduction will revert back to 2017 levels. I'm sure the writers of this law had a certainly that between now and then, congress will not leave the situation alone. And they won't.