Post-Wayfair, sales tax seems like the only thing anyone in
State & Local Tax ("SALT") is talking about.
But the Tax Cuts and Jobs Act of 2017 ("TCJA") –
Congress' colossal federal income tax overhaul –
ushered in another momentous change in the relatively stable world
of SALT that deserves our attention. Prior to the TCJA,
taxpayers who itemized deductions could deduct the full amount paid
in state-level income, property, real estate, and sales taxes on
their federal income tax return. Under the new tax law, that
deduction is capped at $10,000 for single and married taxpayers
filing jointly ($5,000 for married taxpayers filing
separately). For high-earning taxpayers living in
mid-to-high-tax states, the SALT deduction cap makes a significant
difference.
