Article written by Tax Partner Randy Markowitz and Senior Tax Associate Jeffrey Golds
Both the House and Senate versions of the “Tax Cuts and Jobs Act of 2017” eliminate for individuals the deduction for state and local income taxes and cap the amount of non-business related property taxes that may be deducted at $10,000. State and local taxes paid in the course of running a trade or business will still be fully deductible. For many individuals, particularly those in high tax states such as Illinois, California, and New York, this will significantly reduce the deductions they are accustomed to taking.
Because the current law permits taxpayers to deduct the total amount of their non-business state and local property taxes in the year paid, taxpayers should consider prepaying some or all of their anticipated state and local property taxes for 2018 before the New Year. Taxpayers should also consider paying their 2017 state and local income taxes in 2017. This will allow the deductions to be preserved and applied against 2017 income. Since the application of the Alternative Minimum Tax might mitigate these benefits, please discuss your specific situation and any other questions you might have with a member of the FGMK Tax Practice before taking these steps.
The summary information in this document is based on pending legislative proposals and is being provided for educational purposes only. These proposals are subject to change, and it is believed likely will change from the contents noted herein. Recipients may not rely on this summary other than for the purpose intended, and the contents should not be construed as accounting, tax, investment, or legal advice. We encourage any recipients to contact the authors for any inquiries regarding the contents. FGMK (and its related entities and partners) shall not be responsible for any loss incurred by any person that relies on this publication.
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