- State legislatures have reacted to the new $10,000 limit on the federal deduction for state and local taxes (SALT) with workaround legislation
- States intend to ensure that taxpayers won’t lose the benefit of deducting all state and local income tax on their federal returns
- Some states, such as California and Illinois, have passed bills that allow taxpayers to make charitable contributions to a state fund rather than pay state taxes
- Other states have enacted statutes that allow taxpayers to make charitable contributions to a state or local government fund in addition to or instead of paying taxes. These government funds would serve “public purposes”.
- Taxpayers who make a contribution could also claim a credit or take a deduction against state tax for the contribution.
- Treasury Department will propose regulations to address state workaround legislation.
- For a married taxpayer filing a separate return, the cap is $5,000 (Ouch!!) The cap applies for tax years that begin in 2018 through 2025.
- GOP did not limit the deduction for state and local real or personal property taxes incurred in carrying on a trade or business or income-producing activity.
Let us know your thoughts on this matter!!!!!
This GOP series of information will continue – stay tuned!!!!
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