The SALT (State and Local Taxes) deduction is a tax provision that allows taxpayers to deduct certain state and local taxes on their federal income tax returns. These taxes include state and local income, sales, and property taxes. The SALT deduction has been in place for many years, but its availability and limitations have been subject to changes in tax laws over time.
Under the Tax Cuts and Jobs Act (TCJA) passed in 2017, the SALT deduction was capped at $10,000 per tax year for individuals and married couples filing jointly. This limitation primarily affects taxpayers who live in states with high income and property taxes. Prior to the TCJA, taxpayers could deduct an unlimited amount of state and local taxes on their federal income tax returns.
The SALT deduction is an itemized deduction, which means that taxpayers must choose between taking the standard deduction or itemizing their deductions on their federal income tax return. Taxpayers who choose to take the standard deduction cannot also take advantage of the SALT deduction.
It’s important to note that tax laws and regulations can be complex and subject to change. Taxpayers should consult with a qualified tax professional or seek guidance from IRS to understand how the SALT deduction may apply to their individual tax situation.
Contact Specialty Bookkeepers & Tax to schedule your tax consultation today.