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articles & updates | article
The New Conservation Tax Incentives - Some Things We Know and
Some Things We Don't Know
by Stephen J. Small, Esq.
This first set of calculations has no surprises. Compare the income tax savings under the "old" law (deduction up to 30% of AGI) and the new law, both with the 50% incentive and the 100% incentive.
Here is $50,000 of income, no deductions:
| Adjusted Gross Income |
$50,000 |
| Itemized Deductions |
$0 |
| Net Federal Tax |
$4,210 |
Here is $50,000 of income and a $500,000 easement donation taken up to 30% of AGI:
| Adjusted Gross Income |
$50,000 |
| Itemized Deductions |
$15,000 |
| Net Federal Tax |
$3,505 |
| Income Tax Savings ($705 x 6) |
$4,230 |
Here is $50,000 of income, with a $500,000 easement donation taken up to 50% of AGI:
| Adjusted Gross Income |
$50,000 |
| Itemized Deductions |
$25,000 |
| Net Federal Tax |
$2,005 |
| Income Tax Savings($2,205 x 16) |
$35,580 |
Here is $50,000 of income, with a $500,000 deduction taken up to 100% of AGI:
| Adjusted Gross Income |
$50,000 |
| Itemized Deductions |
$50,000 |
| Net Federal Tax |
$0 |
| Income Tax Savings($4,210 x 10) |
$42,100 |
Here is $100,000 of income, no deductions:
| Adjusted Gross Income |
$100,000 |
| Itemized Deductions |
$0 |
| Net Federal Tax |
$13,890 |
Here is $100,000 of income, with a $500,000 easement deduction taken up to 30% of AGI:
| Adjusted Gross Income |
$100,000 |
| Itemized Deductions |
$30,000 |
Net Federal Tax |
$8,965 |
| Income Tax Savings($4,925 x 6) |
$29,550 |
Here is $100,000 of income, with a $500,000 easement deduction taken up to 50% of AGI:
| Adjusted Gross Income |
$100,000 |
| Itemized Deductions |
$50,000 |
| Net Federal Tax |
$5,755 |
| Income Tax Savings($8,135 x 10) |
$81,350 |
Here is $100,000 of income, with a $500,000 deduction taken up to 100% of AGI:
| Adjusted Gross Income |
$100,000 |
| Itemized Deductions |
$100,000 |
| Net Federal Tax |
$0 |
| Income Tax Savings($13,890 x 5) |
$69,450 |
Note, also, how close the tax savings numbers are with a larger deduction. Here is $100,000 of income, with a $1,000,000 deduction taken up to 50% of AGI:
| Income Tax Savings($2,205 x 16) |
$130,160 |
Here is $100,000 of income, with a $1,000,000 deduction taken up to 100% of AGI:
| Income Tax Savings($13,890 x 10) |
$138,900 |
Here is $200,000 of income, no deductions:
| Adjusted Gross Income |
$200,000 |
| Itemized Deductions |
$0 |
| Net Federal Tax |
$40,672 |
Here is $200,000 of income, with a $500,000 easement donation taken up to 30% of AGI:
| Adjusted Gross Income |
$200,000 |
| Itemized Deductions |
$59,010 |
| Net Federal Tax |
$27,033 |
| Income Tax Savings($13,639 x 6) |
$81,834 |
Here is $200,000 of income, with a $500,000 easement deduction taken up to 50% of AGI:
| Adjusted Gross Income |
$200,000 |
| Net Federal Tax |
$16,713 |
| Income Tax Savings ($23,959 x 5) |
$119,795 |
Here is $200,000 of income, with a $500,000 deduction taken up to 100% of AGI:
| Adjusted Gross Income |
$200,000 |
| Itemized Deductions |
$199,010 |
| Net Federal Tax |
$0 |
| Income Tax Savings($81,344 plus $23,959) |
$105,303 |
Here is $500,000 of income, no deductions:
| Adjusted Gross Income |
$500,000 |
| Itemized Deductions |
$0 |
| Net Federal Tax |
$143,876 |
Here is $500,000 of income, with a $500,000 easement deduction taken up to 30% of AGI:
| Adjusted Gross Income |
$500,000 |
| Itemized Deductions |
$143,010 |
| Income Tax Savings |
$154,782 |
Here is $500,000 of income, with a $500,000 easement deduction taken up to 50% of AGI:
| Adjusted Gross Income |
$500,000 |
| Itemized Deductions |
$243,010 |
| Net Federal Tax |
$64,062 |
| Income Tax Savings($79,814 x 2) |
$159,628 |
Here is $500,000 of income, with a $500,000 deduction taken up to 100% of AGI:
| Adjusted Gross Income |
$500,000 |
| Itemized Deductions |
$493,010 |
| Net Federal Tax |
$479 |
| Income Tax Savings |
$143,397 |
Here is $1,000,000 of income, no deductions:
| Adjusted Gross Income |
$1,000,000 |
| Itemized Deductions |
$0 |
| Net Federal Tax |
$318,876 |
Here is $1,000,000 of income, with a $500,000 easement donation taken up to 30% of AGI:
| Adjusted Gross Income |
$1,000,000 |
| Itemized Deductions |
$283,010 |
| Income Tax Savings |
$155,898 |
Here is $1,000,000 of income, with a $500,000 easement donation taken up to 50% of AGI:
| Adjusted Gross Income |
$1,000,000 |
| Itemized Deductions |
$483,010 |
| Net Federal Tax |
$153,427 |
| Income Tax Savings |
$165,449 |
Compare this result with the one following. Here is $1,000,000 of income, with a $1,000,000 deduction taken up to 50% of AGI:
| Adjusted Gross Income |
$1,000,000 |
| Itemized Deductions |
$483,010 |
| Net Federal Tax |
$153,427 |
| Income Tax Savings($165,449 x 2) |
$330,898 |
Here is $1,000,000 of income, with a $1,000,000 deduction taken up to 100% of AGI:
| Adjusted Gross Income |
$1,000,000 |
| Itemized Deductions |
$983,010 |
| Net Federal Tax |
$1,479 |
| Income Tax Savings |
$317,397 |
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