SALT Tax Deduction Increase

[Anonymous]

Anonymous wrote:

Anonymous wrote:When do you guys think this will take effect IF passed? We are ready to file taxes and this $10k increase would impact our itemized return.

It is retroactive to 2023. Don't file yet. If you have already filed (which would be stupid under the circumstances) and this becomes law, file an amended return.

For someone in the 32 percent bracket, this potentially represents a tax savings of $3,200.

Seems unlikely to pass.

"If it were to pass the House, though, the bill faces long odds in the Senate, though opinions there on the SALT provision are mixed. Democrats considered lifting the cap during negotiations on Biden’s Build Back Better agenda, but those proposals ultimately stalled due to opposition from progressives and conservatives alike."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When do you guys think this will take effect IF passed? We are ready to file taxes and this $10k increase would impact our itemized return.

It is retroactive to 2023. Don't file yet. If you have already filed (which would be stupid under the circumstances) and this becomes law, file an amended return.

For someone in the 32 percent bracket, this potentially represents a tax savings of $3,200.

Seems unlikely to pass.

"If it were to pass the House, though, the bill faces long odds in the Senate, though opinions there on the SALT provision are mixed. Democrats considered lifting the cap during negotiations on Biden’s Build Back Better agenda, but those proposals ultimately stalled due to opposition from progressives and conservatives alike."

No, I agree, but I think it could have a chance, however small, of slipping in to the bigger tax bill as an amendment. Every day that goes by makes it less likely, however.

Keep in mind all this really does is adjust the original cap, which has been in place since 2017, for inflation. And of course, come 2026 there will be no SALT cap at all when the Trump tax cuts expire.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What am I missing?

Standard deduction for married couples filing jointly is $27,700. Adding another $10K to current $10k is still below the standard deduction.

I guess the yay only applies if you are filing single/head of household.

Also, 2023 tax season is already here. Many of the tax softwares have already been coded to current tax laws. Why do they change tax laws so late in the game?

It helps if you are already itemizing. Fro example if you have $10k in current SALT deduction, $5k in charitable donations and $10k in mortgage interest you would be under the standard deductions dot just take that. But if SALT cap is raised to $20k you would be above and would itemize

Although you only get the marginal value over the standard deduction, so in your example it would be $35k, $7300 over the standard. So yes it's a boost, but you don't get the full value of the $10k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What am I missing?

Standard deduction for married couples filing jointly is $27,700. Adding another $10K to current $10k is still below the standard deduction.

I guess the yay only applies if you are filing single/head of household.

Also, 2023 tax season is already here. Many of the tax softwares have already been coded to current tax laws. Why do they change tax laws so late in the game?

It helps if you are already itemizing. Fro example if you have $10k in current SALT deduction, $5k in charitable donations and $10k in mortgage interest you would be under the standard deductions dot just take that. But if SALT cap is raised to $20k you would be above and would itemize

Although you only get the marginal value over the standard deduction, so in your example it would be $35k, $7300 over the standard. So yes it's a boost, but you don't get the full value of the $10k.

True, although anyone who's purchased a home in the last year and is paying higher amounts of deductible interest could very well have interest payments above the standard deduction immediately. So, those people will get the full $10,000 extra between any state income, real property and personal property (ie car) taxes they pay.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When do you guys think this will take effect IF passed? We are ready to file taxes and this $10k increase would impact our itemized return.

It is retroactive to 2023. Don't file yet. If you have already filed (which would be stupid under the circumstances) and this becomes law, file an amended return.

For someone in the 32 percent bracket, this potentially represents a tax savings of $3,200.

Seems unlikely to pass.

"If it were to pass the House, though, the bill faces long odds in the Senate, though opinions there on the SALT provision are mixed. Democrats considered lifting the cap during negotiations on Biden’s Build Back Better agenda, but those proposals ultimately stalled due to opposition from progressives and conservatives alike."

No, I agree, but I think it could have a chance, however small, of slipping in to the bigger tax bill as an amendment. Every day that goes by makes it less likely, however.

Keep in mind all this really does is adjust the original cap, which has been in place since 2017, for inflation. And of course, come 2026 there will be no SALT cap at all when the Trump tax cuts expire.

If there isn't momentum in the Senate, that seems unlikely. That already didn't make it into the House version. If the Senate doesn't add it in the markup process, it won't get added back in Committee. Most likely outcome is the Senate revises it a bit at the edges involving the CTC, kicks it back to the House, and they take it and vote on the revised version again and move on.

[Anonymous]

If we’re going to raise a cap, I wish it was the childcare FSA limit. 5k is peanuts compared to the cost of childcare and could help out a lot of families regardless of ability to own a home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sweet. I think we will be right under the $500K limit.

So annoying. We will not quality, though the $20k won’t even cover property taxes.

So sad. I feel for you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Sweet. I think we will be right under the $500K limit.

So annoying. We will not quality, though the $20k won’t even cover property taxes.

So sad. I feel for you.

It's a hard knock life.

[Anonymous]

Anonymous wrote:If we’re going to raise a cap, I wish it was the childcare FSA limit. 5k is peanuts compared to the cost of childcare and could help out a lot of families regardless of ability to own a home.

They're raising the child credit, so ...

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not going to pass, and it would be bad policy, anyway. The SALT deduction (which I also could claim more than the cap for, if the cap were raised or eliminated) is absurdly regressive. It sucks to pay more in taxes, but there’s no reason those of us who earn enough to have more to deduct than the standard deduction need more breaks.

Except that if you put it in an LLC then it's a business deduction. In effect it's a tax targeted at upper middle class urban professional families. It's horrible politics and horrible policy because it promotes a race to the bottom and transience while incentivizing renting over individual ownership.

It's perfectly fine politics -- as an upper middle class urban professional with a family, I'm not exactly under any illusions that the rest of the country wants to do me any favors. It doesn't necessarily incentivize renting — the deduction is for income and property taxes alike. In my household, we pay more D.C. income tax each year than we do property tax, and I'd love to be able to deduct that, but even if it's better for me, it's still regressive tax policy to let people who owe a lot of state income tax because we make a lot of money deduct all that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When do you guys think this will take effect IF passed? We are ready to file taxes and this $10k increase would impact our itemized return.

It is retroactive to 2023. Don't file yet. If you have already filed (which would be stupid under the circumstances) and this becomes law, file an amended return.

For someone in the 32 percent bracket, this potentially represents a tax savings of $3,200.

When is it being voted on?

It is not being voted on, and if it were being voted on, it would fail.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If we’re going to raise a cap, I wish it was the childcare FSA limit. 5k is peanuts compared to the cost of childcare and could help out a lot of families regardless of ability to own a home.

They're raising the child credit, so ...

They're not actually raising the credit amount for most people (and, I suspect, not for anyone on this board). They're expanding eligibility for it to a larger share of families that don't earn enough to have tax liability for the credit to offset.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It hilarious how liberals and Dems scream about the rich not paying enough taxes and about rampant wealth inequality, yet here they are, demanding the U.S. govt and the rest of the country help subsidize their expensive giant homes with tax deductions.

There should be $0 able to be deducted for owning a home. Why is it my responsibility to give you a tax break for owning a $1M home? Dems, walk the walk if you’re gonna talk the talk. Fork up the taxes since you are telling everyone else to pay more to combat wealth inequality.

I’m sorry you can’t afford to buy a home.

hmmm- I dont know about others but my property taxes pay for everyone's kids public school education plus recreation opportunities including public pools, rec centers, rec center programing, school buses & parks regardless of wether I use these. To make it 'fair' why dont people pay for these things as they go/use them? Would that be more fair? and lets get rid of teh subsidies that residents of these Staes make to the farmers in rural areas plus the upkeep of all teh roads in rural areas in flyover country that I certainly dont use. I only buy local organic produce and meat and wheat and herbs grown in Italy, same for pasta. I buy almost all of my clothing and cosmetics overseas b/c FDA is a joke. and by cosmetics I am including kiddy shampoos and toothpaste , and I buy it there b/c it's cheaper. only buy French butter and foreign cheeses. I dont use those roads- but I pay for them, why should I? and I am far from alone. Even low income immigrants in my family grow their own herbs/veggies, buy local meat and shop for stuff when they go back to their home countries. So why exactly should we be paying for Iowan roads?

You pay for others in taxes b/c we live in a civil society and participate in it for teh common good. You need to go back and re-read the Little House books to understand teh fine line between independence and cooperation plus what a community and government owes its people vs. what they should do for themselves. And Wilder was a huge libertarian so teh agenda is for more self-reliance, not hand outs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When do you guys think this will take effect IF passed? We are ready to file taxes and this $10k increase would impact our itemized return.

It is retroactive to 2023. Don't file yet. If you have already filed (which would be stupid under the circumstances) and this becomes law, file an amended return.

For someone in the 32 percent bracket, this potentially represents a tax savings of $3,200.

When is it being voted on?

It is not being voted on, and if it were being voted on, it would fail.

NP and I think a vote was promised on it, possibly as early as Friday. I agree the chances of it passing are small though and it may not get a vote in the senate.

[Anonymous]

Anonymous wrote:If we’re going to raise a cap, I wish it was the childcare FSA limit. 5k is peanuts compared to the cost of childcare and could help out a lot of families regardless of ability to own a home.

+1 now thats good policy and directly benefits all parents regardless of home ownership status