How to Mine 2017 Returns for SALT Deductions

salt deductions

Despite an eleventh-hour reprieve from Congress, this may be the last year many taxpayers deduct their state and local tax (SALT) payments on their personal tax returns.

The concession agreed to by lawmakers in the final version of the new Tax Cuts and Jobs Act (TCJA) comes “too little, too late,” for some clients, especially those residing in high-tax states.

Prior to the TCJA, individuals could generally deduct state and local property tax payments and either their state and local income taxes or sales taxes. There was no annual limit on the deduction. Now the new tax law allows a combined SALT deduction of $10,000 a year, beginning in 2018. In addition, due to other changes — including doubling the standard deduction and reducing or eliminating other itemized deductions — many taxpayers who have itemized in the past expect to claim the standard deduction in 2018,

Notably, the limited deduction doesn’t provide much help to residents of states like California, New York and New Jersey, where SALT payments can frequently exceed the 2018 standard deduction of $12,000 for single filers and $24,000 for joint filers. If they no longer itemize deductions, these taxpayers will realize ZERO federal income tax benefit from any and all of their SALT payments.

But that’s a story for next year’s tax season. It’s still full steam ahead for SALT deductions on the 2017 returns your clients are about to file.

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About Ken Berry

Ken Berry

Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a wide variety of newsletters, magazines, and other periodicals.           


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