The Propeller - Hackers and Taxes - 9-7-2025

Tech: Two Hacks that Changed Privacy Forever

Hacks aren’t new. For decades, some of the smartest (and most dangerous) people on the planet have been finding ways to break into systems and steal data. From weak passwords to insecure vendors, history shows us that no company is truly bulletproof.

And while the tech has changed, the stakes remain the same. Your personal information is always on the line.

This week, we’re looking at 2 of the biggest hacks in history – Yahoo and Target. I also share tools you can use today to make sure you don’t end up as the next victim.

Yahoo (2013)

Back in 2013 and 2014, Yahoo suffered what’s still considered the largest data breach in history.

At first, the company said “only” 1 billion accounts had been affected. Years later, they admitted the truth: every single one of Yahoo’s 3 billion accounts was compromised.

Hackers got away with names, email addresses, phone numbers, birth dates, and even security questions. For years, most users had no idea their information was floating around on the dark web and Yahoo itself didn’t disclose the full extent until 2017, right as it was being acquired by Verizon.

The significance of this hack can’t be overstated.

It showed the world that even tech giants can hide breaches for years, leaving billions of people exposed to spam, phishing, and identity theft without warning. If you had a Yahoo account back then, your data was almost certainly part of it.

Target (2013)

This one was crazy.

In late 2013, right in the middle of the holiday shopping season, retail giant Target revealed a massive cyberattack that exposed the credit and debit card data of 40 million customers. Soon after, it was discovered that the hackers also stole the personal details — names, addresses, phone numbers, and emails — of 70 million more people.

The attackers gained access through a third-party HVAC contractor (The hackers got the password to the Heating controls of a store, which got them into the network), then moved laterally into Target’s payment systems. Once inside, they installed malware on point-of-sale registers across stores nationwide. Shoppers had no idea that swiping their card at checkout was also handing it over to criminals.

The attacker gained access to Target’s system through Fazio Mechanical, an HVAC contractor

The fallout was enormous. Banks had to reissue millions of cards, lawsuits piled up, and Target ultimately agreed to an $18.5 million settlement, one of the largest ever for a data breach at the time.

Beyond the money, the attack was a wake-up call: even everyday retail purchases can become gateways to massive data theft.

How You Can Protect Yourself Today

Breaches like Yahoo and Target prove that you can’t always trust companies to keep your data safe. However, there are steps you can take to protect yourself:

Use a password manager like Bitwarden or 1Password to generate strong, unique passwords for every account. That way, if one site is breached, the damage doesn’t spread.

Turn on two-factor authentication (2FA) wherever possible. Use an authenticator app (Authy, Google Authenticator) or even a hardware key (YubiKey) for maximum security.

Hacks have been around for decades, and the truth is that even the biggest companies can’t always keep your data safe.

The lesson is clear: you can’t control companies from getting hacked, but you can protect yourself with tools like password managers and two-factor authentication.

Life: 21 Simple Rules of Respect and Everyday Courtesy

Don’t call someone more than twice in a row. If they don’t answer, it means they can’t – or don’t want to. Respect that.
Pay back borrowed money before they have to ask. Same goes for umbrellas, pens, tools, and Tupperware. That’s called integrity.
If someone invites you out to eat, don’t order the most expensive thing on the menu. Gratitude tastes better than luxury.
Stop asking intrusive questions like, “So when are you getting married?” “Any kids yet?” “When’s the house coming?” Their life isn’t your business.
Hold the door for the person behind you. Always. That’s basic manners.
If your friend pays for the Uber today, you grab the next one. Fairness, not freeloading.
Respect different opinions. What looks like a “6” to you might look like a “9” to someone else.
Don’t interrupt. Listen. You’ll learn more with your mouth closed than open.
If you make a joke and no one laughs, stop. Awkward silence says enough.
“Thank you” never gets old. Say it often.
Praise in public, correct in private.
Don’t comment on someone’s weight. Just say, “You look great!” and leave it at that.
If someone shows you a photo on their phone, don’t swipe. You never know what might come up next.
If a friend says they’re going to the doctor, don’t ask, “What’s wrong with you?” Say, “Hope everything’s okay.” Respect their privacy.
Treat the janitor the same way you treat the CEO. Your character shows in how you treat people who can’t give you anything in return.
If someone is talking to you, put your phone down. Looking at the screen is just plain rude.
Don’t give advice unless they ask for it. Nobody listens to unsolicited sermons.
If you see someone you haven’t met in years, don’t ask their age or salary. Ask how they’ve been. That’s what matters.
Mind your own business. Other people’s lives don’t always need your input.
Take off your sunglasses when you’re having a face-to-face conversation. Respect shows in your eyes.
Never flaunt wealth in front of someone struggling, or brag about kids to someone who can’t have them. Empathy is true class.

Finance: State and Local Tax (SALT) Planning

Every year you get to choose between the standard deduction and itemized deduction on your tax return.

The tax software automatically chooses the higher of the 2, but it’s important to know how these amounts are calculated, so we can plan strategically to lower taxes. Let’s get into it:

The standard deduction is $15,750 for single, or $31,500 for married in 2025.

The itemized deduction is comprised of:

State income (or sales) taxes
Real estate taxes
Medical expenses
Mortgage interest
Gifts to charity
Casualty losses

In 2024 and prior, nearly 90% of taxpayers took the standard deduction because the state income taxes (or sales taxes) + real estate taxes were limited to $10,000 only.

But, the new tax bill changed that for 2025.

The state and local tax deduction cap is increasing to $40,000 in 2025 for itemized deductions. The $40,000 limit applies to both single individuals and married filing jointly (the “marriage penalty” still applies).

The $40,000 amount will increase to $40,400 in 2026 and continue to increase by 1% annually until 2030. In 2030, the state and local tax deduction cap will revert to $10,000.

Importantly, there is a $500,000 modified adjusted gross income (MAGI) threshold (for both single and married filers), and the deduction will be reduced by 30% of the amount by which it exceeds that threshold, but not below $10,000. This means that after $600,000 of MAGI, the SALT limit is $10,000.

Example: In 2025, you made $200,000 living in Illinois. You paid $9,800 of state income taxes and $10,000 of property taxes. Your SALT deduction is $19,800 (vs $10,000 pre tax bill).

Tax planning opportunity #1: if you have the means, see whether you can pay 2 property tax bills in 1 year to maximize your deduction. This is called “bunching”.

The idea is simple – bunch your deductions in year 1, and take the standard deduction in year 2.

For example, say that you normally pay $10,000 in property taxes each year. If you prepay part of the next year’s taxes (say $10,000 for 2026) in 2025, the IRS may allow you to deduct both the current $10,000 and the $10,000 prepayment. This “bunches” 2 years of deductions into 1 year.

Important rule – only taxes paid in 2025 and assessed prior to 2026 can be deducted for 2025. So if your county assessed in 2026, you can’t deduct that on your 2025 taxes. That would be a 2026 tax deduction.

So it’s important to check when your county actually assesses and releases the tax bills as the timing matters.

In addition, if you are in the $500,000-$600,000 MAGI range, the new $40,000 limit will be phased out.

For example, let’s take a married couple in California, a surgeon and a stay at home spouse.

Total MAGI: $500,000

State taxes + property taxes: ~$60,000 (capped at $40k)

Mortgage interest: $25,000

Total sch A deductions: $65k

Taxable income: $435,000

Let’s take the same example, but with $600,000 of AGI.

State taxes + property taxes: ~$60,000 (capped at $10k)

Mortgage interest: $25,000

Total sch A deductions: $35k

Taxable income: $565,000

So, this couple lost $30k of deductions for $100k of increased income (taxable income of $435,000 vs $465,000 after adjusting for the $100k increase)

So for every $1 of income in the 500-600k range, they lose $0.30 of SALT deduction.

Therefore, the marginal tax rate for married couple in such income category is $1.30 * 32% = 39%. If single, it can be as high as $1.3 * 35% = 45.5%

This is typically referred to as a “tax torpedo” where incomes in certain thresholds could exponentially increase your marginal tax rate due to phaseouts.

This is where tax planning comes into play:

Tax planning opportunity #2: If you are in this income range, consider calculating the impact of shifting taxable savings interest products (like HYSA) to tax-exempt interest (Muni bonds) due to the MAGI definition.

Tax planning opportunity #3: If you are in this income range, consider doing tax loss harvesting, maximizing your pre-tax contributions, HSAs, and accelerating deductions or postponing income (for business owners) to reduce your MAGI.

Knowing how these SALT deductions come together, and planning strategically, can help you lower your tax bill.

Quote of the Week

“You don’t always have to be doing something. You can just be, and that’s plenty.”
– Alice Walker

This quote reminds us that you don’t always need to be busy or productive to have value. Simply existing, resting, reflecting, or just being present is enough. It’s a reminder that your worth isn’t tied to constant action or achievement.

Take care as summer fades,

This is re-published from the weekly email sent by Leonard Mack entitled The Propeller. To subscribe, visit https://www.LeonardMack.com/subscribe and read it every Sunday evening.

This intellectual nourishment is intended for informational purposes only. One should not construe anything herein as being legal, tax, investment, financial, or other advice.

My rule is this – I have no advice to give, only experience to share. I have no interest in being a guru or telling people what they should do. Rather, I share my own experience because there is no right or wrong. Your mileage may vary.

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