What are the limits on a SALT deduction? After massive tax reform last year, this is the question on many homeowners’ minds.
Q: When it comes to the SALT deduction, can you give me a little more information on the limits.
A: In the last big tax bill that Congress passed, the law limits the amount of State and Local Taxes (SALT) to $10,000. That means that if your real estate property taxes are $10,000 and your state income taxes are $10,000, you will be limited in deduction a grand total of $10,000. If your property taxes are $3,000 and your state income taxes are $5,000, you will get the full benefit of deducting both as the total amount is $8,000 and below the limit of $10,000.
For taxpayers that do not itemize their deductions, the $10,000 limit on state and local taxes does not matter, but for taxpayers in higher property tax and higher state income tax states and where the taxpayer does itemize his or her deductions, the $10,000 limit will kick in. In one of our previous columns we transposed some of our numbers and it’s good for us to clarify to our readers that the maximum deduction you can take for your property and state taxes is a total of $10,000.
I hope this helps. Thanks for your question.