Tax Cut and Jobs Act (TCJA)| State and Local Tax Deduction | Tax Attorney Lexington, KY

State and Local Tax (SALT) Deduction

The Tax Cut and Jobs Act (TCJA) changes many itemized deductions. The amount you pay in state and local property taxes, income, and sales taxes can be deducted from your Federal income taxes—and the amount you can currently deduct (pre-TCJA) is unlimited. The new law limits the deduction for these local and state taxes to $10,000.

Residents in the vast majority of counties in the U.S. claim an average SALT deduction below $10,000. Most low- and middle-income families who currently itemize because of their SALT deduction will likely take the much higher standard deduction unless their total itemized deductions (including SALT) are more than $12,000 if single and $24,000 if married filing jointly.

Originally lawmakers in the House and Senate wanted to repeal SALT entirely, to help pay for the tax cuts, but lawmakers in high-tax states (specifically CA, IL, NY and NJ) fought to keep it in. Those in higher income households in high-tax states will benefit from the SALT deduction.

For more information about the TCJA’s provisions, visit our main informational page here. For help with your tax questions or concerns, call Gayheart and Campbell, PLLC at 859-276-6193 or request a consultation here.