The SALT deduction (State and Local Taxes) now limits taxpayers to a $10,000 deduction of their state and local property taxes paid, as well as either state and local income taxes or sales taxes. Previously, taxpayers could deduct their total amount. This $10,000 cap has been one of the most contentious parts of the “Tax Cuts and Job Acts.”
This is likely a big disappointment to taxpayers in high-tax locales like Pennsylvania, New Jersey, and New York.
Another thing to keep in mind is the higher standard deduction, as the SALT deduction is an itemized deduction, meaning that to take advantage of it, you need to itemize deductions on your tax return. The Act nearly doubled the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for married couples filing joint returns. So taxpayers who do not meet these thresholds will not be able to use the SALT deduction at all.
Because of these and other changes, only about 5% of taxpayers are expected to itemize deductions starting in 2018. In recent years, about 30% of all tax returns contained itemized deductions. That means five out of six people who usually itemize deductions will no longer be able to.
For additional real estate tax filing tips, feel free to give me a call to chat, contact your accountant, or visit this trusted site.
Until next time,
Jeff “City” Block, Esq.