Maybe I'm dumb and don't understand it...so help me out if I'm wrong...

But isn't this eliminating the $10,000 cap on State and Local Taxes? Meaning the states like NY and Cali that have income taxes will be able to deduct any amount of State Income taxes they pay instead of it being capped at $10,000?

Seriously if I have this wrong then help me out with it. But that sounds like an incentive for them to pay more State Income tax and have it taken out of their Federal? Helping out the states who voted for a state income tax? It sounds like it puts more of the federal tax burden on us and lets them concentrate on their local/state tax burden.

I realize it is a deduction not a credit so maybe it isn't a big deal to me after all. But just seems like something I don't want to be in favor of. Again, help me understand it better please

The SALT cap needs to stay, although the politics of the issue probably require an adjustment. They could probably double the cap to $20,000 and not take too big of a hit to the federal revenue, while still punishing big taxing states. It's a touchy issue in New York, New Jersey, and several other states, and with a razor thin majority, you have to have every Republican on board to get a reconciliation bill passed.

Why add another layer?

Why not just simplify the code, and fix the problem? That would be much better than adding another bandaid to the 1,000 piled on.

It's a dumb political handout to subsidize blue states with high taxes. It should be $0. The proponents will argue, in theory, it encourages states to provide services to help citizens and relieve the federal government of some burdens. I'm not 100% sure of Trump's plan but I've seen 2 different proposals attributed to him: 1) completely eliminate cap and allow full deduction of SALT taxes and 2) keep the single filer at $10k and raise the married-filing-jointly to $20k. To me #1 is stupid, expensive and should be a non-starter for everyone in Congress. On #2, if you're going to have the SALT deduction, I agree the MFJ cap should be 2X the single cap.

themissinglink said:

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It's a dumb political handout to subsidize blue states with high taxes. It should be $0. The proponents will argue, in theory, it encourages states to provide services to help citizens and relieve the federal government of some burdens. I'm not 100% sure of Trump's plan but I've seen 2 different proposals attributed to him: 1) completely eliminate cap and allow full deduction of SALT taxes and 2) keep the single filer at $10k and raise the married-filing-jointly to $20k. To me #1 is stupid, expensive and should be a non-starter for everyone in Congress. On #2, if you're going to have the SALT deduction, I agree the MFJ cap should be 2X the single cap.

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It would help a lot of Trump's people in Texas too so it's not just a blue state subsidy. I agree with another poster above that we should fix the root problem of excessive property taxes in TX, but in absense of that being solved SALT cap increase/removal helps a LOT of Texans.

twk said:

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The SALT cap needs to stay, although the politics of the issue probably require an adjustment. They could probably double the cap to $20,000 and not take too big of a hit to the federal revenue, while still punishing big taxing states. It's a touchy issue in New York, New Jersey, and several other states, and with a razor thin majority, you have to have every Republican on board to get a reconciliation bill passed.

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Rinos from NY want to start at $100-$250k.

Why does it benefit me to subsidize high tax states with overpriced real estate

the most cool guy said:

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I just paid $34,000 in property taxes a week ago and I only get to deduct $10k. It would be really great if we could get rid of this stupid cap. The SALT deduction does not disproportionately benefit Texans, that is for sure. Our property taxes are so ****ing high we're actually paying more than many people elsewhere pay in state income tax.

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Technically, if you account for the general sales tax that is included in that $10k limit, even less than the capped amount comes from your substantial property taxes. These state property taxes need to be reined in. $34,000.00 seems crazy, even if you doubled up payments in one year.

The cap needs to stay, but raise it. $15K would be good, but I could see doubling to $20K (but no more than this!).

With the cap, the people that are disproportionately affected in high tax states (income, property or both, doesn't matter) are then more incentivised to work on getting state and local tax decreases done.

Sorry...
I'm in the camp that there should be ZERO SALT deduction. We all hate taxes obviously, but one can't be packed off against the other. If your taxes are too high then the push should be to lower the taxes not credit one against the other pawning them off on someone else.

Canyon Lake Agbu94 said:

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the most cool guy said:

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I just paid $34,000 in property taxes a week ago and I only get to deduct $10k. It would be really great if we could get rid of this stupid cap. The SALT deduction does not disproportionately benefit Texans, that is for sure. Our property taxes are so ****ing high we're actually paying more than many people elsewhere pay in state income tax.

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Technically, if you account for the general sales tax that is included in that $10k limit, even less than the capped amount comes from your substantial property taxes. These state property taxes need to be reined in. $34,000.00 seems crazy, even if you doubled up payments in one year.

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Yes, obviously sales tax would also make up a lot of what could otherwise be deducted.

$34,000 is for my house, two rental houses, and some undeveloped properties. But it's still way too high.

Fightin_Aggie said:

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twk said:

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The SALT cap needs to stay, although the politics of the issue probably require an adjustment. They could probably double the cap to $20,000 and not take too big of a hit to the federal revenue, while still punishing big taxing states. It's a touchy issue in New York, New Jersey, and several other states, and with a razor thin majority, you have to have every Republican on board to get a reconciliation bill passed.

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Rinos from NY want to start at $100-$250k.

Why does it benefit me to subsidize high tax states with overpriced real estate

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Will it benefit you not to have the 2017 tax cuts extended? The leadership is going to have to give blue state Republicans something on SALT to get their votes on reconciliation. That's the way it works in the real world. I would like for them to increase the cap rather than go back to unlimited deductions, but we'll just have to see what happens. Trump has said he wants to eliminate it, but I hope the red state folks can work out something better than that.

Kenneth_2003 said:

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Sorry...
I'm in the camp that there should be ZERO SALT deduction. We all hate taxes obviously, but one can't be packed off against the other. If your taxes are too high then the push should be to lower the taxes not credit one against the other pawning them off on someone else.

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Property taxes in Texas are never going to be lowered.

When you have a cartel of appraisal districts arbitrarily increasing your property value 10% every single year, and there's nothing you can do about it besides "protest," which may or may not be successful, it's absurd to tell people they should just push to lower taxes. We have, for decades. It's not happening. The system is too entrenched. The legislature won't change it, as unfair as it is.

get rid of all deductions. every single one of them,

I hope that you are including the property taxes paid for the two rental houses on their respective schedule E and not as part of the Schedule A itemized deductions. At least there is that.

I think it has to do with republican reps in blue states. Their republican constituents want the tax deduction.

No other reason to give dems a break for their ludicrous state/local taxes that they vote for.

the most cool guy said:

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Kenneth_2003 said:

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Sorry...
I'm in the camp that there should be ZERO SALT deduction. We all hate taxes obviously, but one can't be packed off against the other. If your taxes are too high then the push should be to lower the taxes not credit one against the other pawning them off on someone else.

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Property taxes in Texas are never going to be lowered.

When you have a cartel of appraisal districts arbitrarily increasing your property value 10% every single year, and there's nothing you can do about it besides "protest," which may or may not be successful, it's absurd to tell people they should just push to lower taxes. We have, for decades. It's not happening. The system is too entrenched. The legislature won't change it, as unfair as it is.

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I'm not going to derail this with a property tax discussion... BUT I'll say it again your tax rates are set by the County Tax Assessor and Collector AFTER all of the appraisals are finalized. Go scream at the Appraisal District until your lungs fall out, all you want. The issue is NOT with them. The issue is with the County, the Fire Protection District, the Emergency Service District, the Hospital District, the Flood Control District, the Community College District, your MUD, the School District, and every other line item on your annual tax bill.

They set their budgets and the dollars will flow in to meet that budget. If they need $10 they're getting $10 whether your house is valued at $100 (10%) or $1000 ( 1%). They're getting the $10. Stop voting for bonds and go protest at the Budget Workshops when they hold public comment.

The SALT cap was probably the only thing that actually increased taxes for some in the 2017 bill.

BoydCrowder13 said:

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The SALT cap was probably the only thing that actually increased taxes for some in the 2017 bill.

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The standard deduction went up so much though that for the VAST majority there was no point to itemizing

For those of you with pass thru entities (LLC's / partnerships, etc,); you are also going to want to make sure the qualified business income deduction stays in place.

Kenneth_2003 said:

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the most cool guy said:

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Kenneth_2003 said:

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Sorry...
I'm in the camp that there should be ZERO SALT deduction. We all hate taxes obviously, but one can't be packed off against the other. If your taxes are too high then the push should be to lower the taxes not credit one against the other pawning them off on someone else.

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Property taxes in Texas are never going to be lowered.

When you have a cartel of appraisal districts arbitrarily increasing your property value 10% every single year, and there's nothing you can do about it besides "protest," which may or may not be successful, it's absurd to tell people they should just push to lower taxes. We have, for decades. It's not happening. The system is too entrenched. The legislature won't change it, as unfair as it is.

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I'm not going to derail this with a property tax discussion... BUT I'll say it again your tax rates are set by the County Tax Assessor and Collector AFTER all of the appraisals are finalized. Go scream at the Appraisal District until your lungs fall out, all you want. The issue is NOT with them. The issue is with the County, the Fire Protection District, the Emergency Service District, the Hospital District, the Flood Control District, the Community College District, your MUD, the School District, and every other line item on your annual tax bill.

They set their budgets and the dollars will flow in to meet that budget. If they need $10 they're getting $10 whether your house is valued at $100 (10%) or $1000 ( 1%). They're getting the $10. Stop voting for bonds and go protest at the Budget Workshops when they hold public comment.

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Your points are persuasive and you are exactly right. Eliminating the deductions is the free market solution. The SALT, and the mortgage interest deduction for that matter, are simply public policies that are intended to support home ownership. But whether or not it actually helps home ownership is highly debated, as the market distortions create some harm from things like encouraging people to spend more than they should. It's also a subsidy for those who have more money and doesn't really help those who can't afford a home, sometimes called "the poor".

OP, not sure if the "incentive" is for someone to pay more in taxes. It does lessen the blow if absurd local taxes, so it may encourage local taxing authorities to increase rates.

That being said, I have a hard time limiting any deduction for salt taxes. As far as I see it, if a state agency took money from me I should never be required to pay federal income taxes on that same money, which is in effect what the current limitation amounts to.

slaughtr said:

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Not that I am for raising the SALT deduction, but you realize the SALT deduction also includes property taxes, not just income taxes. States get you one way or another. Texas gets you via property tax, unlike other states that do it through income taxes. TexAg's posters are complaining all the time about their property taxes in Texas.

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If voters in high tax states, whether they be income or property taxes, need to deal with their high taxes by demanding state elected officials lower them, not by asking federal taxpayers across the country to absorb the additional burden.

It's not a realistic possibility to completely overhaul the tax code and implement a flat tax and get rid of deductions and all of that. We need to work within the realm of possibility to reduce taxes on everyone by as much as possible. Uncapped SALT deduction is part of that

Ag87H2O said:

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slaughtr said:

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Not that I am for raising the SALT deduction, but you realize the SALT deduction also includes property taxes, not just income taxes. States get you one way or another. Texas gets you via property tax, unlike other states that do it through income taxes. TexAg's posters are complaining all the time about their property taxes in Texas.

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If voters in high tax states, whether they be income or property taxes, need to deal with their high taxes by demanding state elected officials lower them, not by asking federal taxpayers across the country to absorb the additional burden.

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I agree.

the most cool guy said:

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Canyon Lake Agbu94 said:

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the most cool guy said:

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I just paid $34,000 in property taxes a week ago and I only get to deduct $10k. It would be really great if we could get rid of this stupid cap. The SALT deduction does not disproportionately benefit Texans, that is for sure. Our property taxes are so ****ing high we're actually paying more than many people elsewhere pay in state income tax.

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Technically, if you account for the general sales tax that is included in that $10k limit, even less than the capped amount comes from your substantial property taxes. These state property taxes need to be reined in. $34,000.00 seems crazy, even if you doubled up payments in one year.

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Yes, obviously sales tax would also make up a lot of what could otherwise be deducted.

$34,000 is for my house, two rental houses, and some undeveloped properties. But it's still way too high.

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Please tell me you are writing off the rental property tax as an expense and not a personal deduction.

taxpreparer said:

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the most cool guy said:

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Canyon Lake Agbu94 said:

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the most cool guy said:

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I just paid $34,000 in property taxes a week ago and I only get to deduct $10k. It would be really great if we could get rid of this stupid cap. The SALT deduction does not disproportionately benefit Texans, that is for sure. Our property taxes are so ****ing high we're actually paying more than many people elsewhere pay in state income tax.

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Technically, if you account for the general sales tax that is included in that $10k limit, even less than the capped amount comes from your substantial property taxes. These state property taxes need to be reined in. $34,000.00 seems crazy, even if you doubled up payments in one year.

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Yes, obviously sales tax would also make up a lot of what could otherwise be deducted.

$34,000 is for my house, two rental houses, and some undeveloped properties. But it's still way too high.

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Please tell me you are writing off the rental property tax as an expense and not a personal deduction.

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Yes, I am. I just provided an example and stated what my total property tax bill was. It's only about $23,000 without the rental houses included that I would be able to deduct with no cap.

the most cool guy said:

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I just paid $34,000 in property taxes a week ago and I only get to deduct $10k. It would be really great if we could get rid of this stupid cap. The SALT deduction does not disproportionately benefit Texans, that is for sure. Our property taxes are so ****ing high we're actually paying more than many people elsewhere pay in state income tax.

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Username checks out for this baller

Kenneth_2003 said:

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BoydCrowder13 said:

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The SALT cap was probably the only thing that actually increased taxes for some in the 2017 bill.

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The standard deduction went up so much though that for the VAST majority there was no point to itemizing

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THIS!!!!

And the way it is laid out on the 1040 was adjusted such that these 2 things actually significantly HURT most of us that earn in the $90k - $200k range. Maybe more than that

Ag87H2O said:

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slaughtr said:

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Not that I am for raising the SALT deduction, but you realize the SALT deduction also includes property taxes, not just income taxes. States get you one way or another. Texas gets you via property tax, unlike other states that do it through income taxes. TexAg's posters are complaining all the time about their property taxes in Texas.

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If voters in high tax states, whether they be income or property taxes, need to deal with their high taxes by demanding state elected officials lower them, not by asking federal taxpayers across the country to absorb the additional burden.

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We live in a high tax state.

I believe median house in Texas is about 400K. Assuming 2% property tax after homestead that's 8K. Throw in sales tax and the average Texan should be capped

This is why a flat sales tax is the most fair way to do it.

Abolish the income tax.

You should not be penalized for helping society be productive.

I'm guessing a good portion of the folks arguing the salt deduction should be zero are also in favor of eliminating taxes on social security.