Under the new tax reform which was signed into law on December 22, 2017, the itemized deduction for state and local taxes will be limited to $10,000 in 2018 going forward. In 2017 and earlier, taxpayers were allowed to deduct Real Estate Taxes, Personal Property Taxes, and the higher of their sales tax paid or their state and local income taxes paid, with no limit. This cap, along with other changes to itemized deductions, will lower the amount of taxpayers eligible to claim itemized deductions. The limit on the deduction will have a greater effect on taxpayers in states with higher income tax rates, as well as those individuals who pay a significant amount in state and local taxes or have large real estate taxes. Real Estate & Personal Property Taxes paid for the purpose of trade or business will still be fully deductible.
Contact an Anders advisor with questions on how tax reform will affect your specific tax situation.
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