As explained in Part 2 of “Tax Reform Now”, Republican lawmakers sought an outright repeal of the state and local tax deduction (“SALT deduction”) in order to offset tax cuts. After encountering criticism from both political parties and lobbyists, Republican lawmakers have renounced this position. Although the new tax reform bill has not been released, Kevin Brady, the Chairman of the House Ways and Means Committee, announced that the SALT deduction will be included in the tax reform bill. A taxpayer who itemizes their deductions can currently take the SALT deduction. The SALT deduction allows a taxpayer to deduct state and local property taxes along with state and local income taxes or sales taxes. It is unclear how the SALT deduction will change in the new tax reform bill. The details of the new tax reform bill will be announced this week. Following this announcement, “Tax Reform Now” will explain the new SALT deduction and its effect on taxpayers.
We hope this update has been helpful. As always, please let us know if you have any questions.