Breathe a sigh of relief payers of state income taxes. The tax bill under consideration will help you. Or not. House Ways and Means Chairman Kevin Brady (R-Texas) announced to reporters today (Thursday, Dec. 14) that conference committee members — or at least the Republican conferees — have agreed to expand the state and local tax, aka SALT, deduction in the final version of H.R. 1, the Tax Cuts and Jobs Act. Taxpayers who itemize will be able to deduct up to $10,000 in state income, sales and property taxes. Some income, sales tax will still be deductible: That's right. Folks living in states with high income taxes such as New York, New Jersey and California will be able to claim those amounts if they itemize deductions. And my neighbors and I here in no-income-tax Texas will be able to claim the state and local sales taxes we pay. In the original House and then Senate-amended versions, state and local income and sales taxes weren't allowed as Schedule A deductions. Both bills did, however, allow federal filers to claim up to $10,000 in real estate taxes, i.e., the property taxes homeowners get from their county (or parish) tax assessor-collectors every year, as an itemized tax deduction. That $10,000 limit remains, but now covers state and local income and sales taxes, too. So if your home's property tax was $4,000 and you paid state income tax of $8,000 you can claim $10,000 of those $12,000 in state taxes on your Schedule A. Still not enough for some: But as I mentioned in an earlier post discussing the property tax itemized claim, the the 10 grand cap is not going to do a lot of people any good at tax deduction time. The reason is that the standard deduction amounts will be substantially increased. There's no word yet on which deduction figures the final bill will contain. The House-proposed standard deductions would be:
In the Senate, they would be:
Either set of deductions or a meeting in the middle of the two would make the $10,000 SALT write-off, regardless of which state and local taxes were claimed on Schedule A, worthless for many filers since it won't be enough to make itemizing worthwhile. To get to that point, itemizing taxpayers also would need to claim charitable donations and/or medical expenses, which reportedly also will remain in some form in the final tax bill. Of course, every taxpayer's situation is unique, so we'll all have to do the math once we see a final tax bill to determine whether we'll be helped, hurt or stay essentially the same tax-wise under the GOP bill. Final bill details expected soon: We could be doing the calculations as soon as tomorrow. Brady has scheduled signing of the conference report signature sheets — these are the documents that formally detail the deal between the House and Senate conference committee members and the support for them by a majority of the involved lawmakers — for between 10 a.m. and noon on Friday, Dec. 15. After that's done, the details will be made public. Then the debate — on Capitol Hill, in statehouses across the country, in the media and among taxpayers — will once again begin in earnest as the House and Senate look to vote on the final tax bill next week. You also might find these items of interest:
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