One of the biggest changes in the current tax reform is the partial retraction of the deduction for state and local taxes. The state and local tax deduction (SALT for short) had previously given taxpayers who itemize deductions a deduction for the total state and local income taxes paid during that tax year, as well as a deduction for property taxes paid during that tax year.
With the new tax bill, the deduction for state and local income taxes paid is completely gone. SALT isn't going to be entirely repealed however: the deduction for property taxes will remain but be capped at $10,000.
What can you do to take advantage of the partial SALT retraction? There are two tips we are giving our clients that can potentially lead to greater tax savings.
Do not wait until January to make any fourth quarter 2017 state and local estimated tax payments. Make your estimated payments prior to December 31st. This ensures that you are not losing out on a possible deduction.
Make any property tax payments prior to December 31st if possible. Some jurisdictions send out property tax bills that allow you to make installment payments over time. If you have the ability to pay the full amount of your property taxes prior to December 31st you are, again, ensuring that you are not losing out on a possible deduction.
Please contact us to learn more about ways to take advantage of the new tax bill.