The SALT Tax: Everything You Need to Know
The new SALT Tax makes Florida a great place to live — find out why
There’s been plenty of news surrounding the recent updates to the federal tax code–and for good reason. The Tax Cuts and Jobs Act of 2017 (which went into effect for 2018 taxes filed this past April) made changes in several areas. The most prominent change included increasing the standard deduction, but plenty of other new provisions took effect as well. One of these involved creating a new cap on the deduction for property taxes.
And it’s that property tax provision in particular that has created a considerable headache for high-income earners living in high-tax states–not to mention the perceived burden on those same states.
The deduction for property taxes was at one time a very generous tax break, allowing filers a deduction of roughly the full amount of property tax owed on any real estate.
For instance, using the previous top federal tax rate of 39.6%, if your state income tax was $35,000 and your property tax also $35,000, that $70,000 total would have been reduced to $42,280 in past years: a considerable write-off.
The state and local tax deduction (or SALT) is now a flat $10,000–nothing more, nothing less. Using those same numbers, the current tax burden is now $60,000 ($70,000 minus $10,000), which results in a new tax bill almost $18,000 higher versus previous years.
Needless to say, when people hear the words tax reform, they expect to pay fewer taxes, not more.
What Does SALT Have to Do With Florida?
SALT includes provisions for two deductions–the first is a deduction for state and local property taxes. The second deduction is for use against either state income taxes or for the state sales tax, whichever is greater.
For individuals living in states without a state income tax, the break provided by the latter option is a welcome relief from some of the taxes they do have to pay.
As one of a handful of states in the US that doesn’t have a state income tax, not to mention relatively low taxes for everything else, that $10,000 deduction provides a significant tax break for Floridians.
In fact, much is being made of residents in those high-burden states aiming to relocate to The Sunshine State to improve their financial situations (and perhaps their golf swings, as well).
Florida is already a fabulous place to call home–from the beautiful beaches and warm sunshine to unlimited golf and boating opportunities.
Now–with a low tax burden that’s become even better, causing Florida to rank among the ten most tax-friendly states in the US–it’s not at all difficult to understand why the SALT tax makes Florida a great place to live.
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