U.S. taxpayers’ 2018 tax liability was largely on par with their expectations, according to a proprietary income tax study released Monday by Janus Henderson Investors. Yet households with incomes of more than $100,000 were likely to be disappointed with their situation.
Asked about the amounts they paid throughout the year and any outstanding liability or refund, 32% of total study participants said they had expected to pay more than in 2017, while 30% actually incurred a larger tax bill than in the previous year.
Janus Henderson surveyed 1,002 U.S. adults in late March to gauge their perceptions and attitudes regarding the 2017 tax overhaul and its effect on 2018 individual tax returns.
Among a subsample of 254 respondents making $100,000 or more, 42% paid more in 2018, whereas only 36% had expected to incur a larger liability. At the same time, 19% paid less in 2018, compared with 28% who had expected their liability to be lower.
“The data confirmed what we had been hearing in qualitative feedback, which is that higher-income taxpayers ended up paying more in taxes than they expected,” Matthew Sommer, vice president and director at Janus Henderson, said in a statement.
Janus Henderson said these discrepancies were most likely due, at least in part, to the new $10,000 limitation on deductibility of state and local taxes.
It noted that although all taxpayers benefit from five of the seven marginal rates being reduced, higher income households with substantial property and state income tax liabilities may find that the lower rates are not enough to offset the new restrictions applied to their itemized deductions.
What Taxpayers Didn’t Know
The survey results showed that many consumers were in the dark about the new tax law despite being more than a year removed from its passage. When asked how familiar they were with the law on a scale of one (not familiar at all) to five (very familiar), the average mean score was 2.05.