Recently we reported that there is a new legislative effort underway to repeal the federal cap on state and local tax deductions, or SALT, which was part of the Tax Cuts and Jobs Act. Now that tax filing season is underway, taxpayers in New Jersey are experiencing the impact of SALT limitations on their own returns, and for many, it’s not pretty.
Some New Jersey residents are finding out that they owe significantly more on their taxes, or aren’t getting the refunds they expected. According to the New Jersey Society of Certified Public Accountants, 1.8 million, or 40 percent of New Jersey taxpayers, deducted their local property and state income taxes in 2016, averaging $18,000 per deduction. Under SALT, deductions are capped at $10,000, so the federal government taxes you on any amount above that.
“The SALT limitation affects the middle class, as well as wealthier taxpayers. It’s unfair to New Jerseyans to bear a larger tax burden than most — and that’s exactly the effect of the cap,” said CPA Ann Callari, tax partner at RotenbergMeril. “The SALT limitation just adds to our taxpayers’ burden.”
As we continue our Know Jersey Finances series, we turn our focus to the impact of SALT on your tax bills. And perhaps more importantly, we’ll talk about tax saving strategies that could help you. For our last show, I’ll be joined by two certified public accountants who will answer all of your tax questions regarding SALT or anything else.