Latest news with #taxdeductions
Washington Post
23-05-2025
- Business
- Washington Post
How would the Big Beautiful Bill affect SALT? What you need to know.
As the Republican Party's signature economic bill heads to the Senate after being passed by the House, one of the key sticking points is a cap on state and local tax deductions that hits Americans in high-tax states especially hard. Lawmakers in 2017 set that deduction limit, known as the SALT cap, at $10,000 to offset Trump's tax cuts for individuals and corporations. But some lawmakers in high-tax states — Democrats and Republicans alike — have lambasted the limit as a burden on their constituents. In effect, the cap meant some taxpayers who itemize get a smaller deduction and bigger tax bill.
CBS News
22-05-2025
- Business
- CBS News
Trump's "big, beautiful bill" includes a significant increase in the SALT cap. What it means for homeowners.
New York City-area Republican members of the House of Representatives are doing a victory dance because they were able to include a huge increase in property tax deductions in the so-called "big, beautiful bill" passed on Thursday. Details of the SALT cap increase Raising the SALT cap was no small accomplishment. By banding together and refusing to support President Trump's tax bill unless they got what they wanted, the Republican congressmen were able to increase deductions that will ease the burden of property taxes for about 90% of homeowners in New York. It's also a win for people in New Jersey and Connecticut. Under the bill, taxpayers can now deduct up to $40,000 annually in state and local taxes -- up from the current $10,000. There is a $500,000 income limit to get the deduction. If you make more than that, you get the $10,000 deduction. The cap will rise by 1% annually for 10 years, when it will be $45,000, and it goes into effect for the 2025 tax year. Tax bill benefits to Tri-State Area residents According to CBS News New York's Marcia Kramer, there are other things in the tax bill that New Yorkers will be happy about, including no tax on tips, which was a campaign promise made by the president. New York, for example, has a huge hospitality industry that employs more than 250,000 people. In addition, there will no longer be a tax on overtime for anyone. Looking at the construction industry, there are over half a million people who who have various jobs, including electricians, plumbers, metal workers, and people who fix the subways. Reaction swift on both sides of the aisle Upstate Republican Rep. Mike Lawler called the passage of the tax bill, "a big deal." "If we did not pass this bill, the fact is it would have been the single-largest tax increase in American history," Lawler said. "And for my Democratic colleagues who are out there criticizing us, saying that it's not enough, the fact is that when they had complete control of Washington they got exactly zero dollars in an increase for SALT -- zilch, nada zip. So for Chuck Schumer or Hakeem Jeffries, or any Democrat, to criticize us, they should be thanking us." Democrats are upset about cuts to Medicare and Medicaid, affordable housing, and clean energy projects. Gov. Kathy Hochul says the Republicans, "caved to the billionaire class at the expense of the constituents they serve."
Yahoo
22-05-2025
- Business
- Yahoo
Lawmakers Near SALT Cap Deal That Could Offer Major Relief to Homeowners in High-Tax States
Homeowners in high-tax states may soon get a break. Lawmakers are nearing a deal to raise the federal cap on state and local tax (SALT) deductions from $10,000 to $40,000—potentially unlocking major tax savings for homeowners in states like California, New Jersey, and New York. The SALT cap has become a sore spot for lawmakers in those states, where rapid property appreciation has driven some tax bills well above the current $10,000 limit. With constituents unable to deduct the full amount, the cap became a political flashpoint and nearly derailed the latest Republican tax-and-spending package after a group of GOP House members threatened to block the bill unless it included more generous tax relief. Now, a compromise appears to be in reach. The SALT cap refers to the federal limit on how much you can deduct in state and local taxes—including property taxes—from your federal income taxes. It was introduced as part of President Trump's landmark 2017 Tax Cuts and Jobs Act, partly as a way to offset the cost of broader tax cuts. Since then, home values have soared, along with the property tax bills that come with them. But under current law, homeowners can only deduct up to $10,000 in combined state and local taxes. That means if your property tax bill is $15,000, only $10,000 of it counts as a deduction on your federal return. The cap has hit homeowners in high-tax states the hardest. In places like California, New Jersey, and New York, high home prices and higher effective property tax rates often push even middle-class families above that $10,000 threshold, leaving them unable to claim a large chunk of what they pay in local taxes. While not yet finalized, lawmakers are closing in on a deal to raise the SALT deduction cap to $40,000—a major increase from the current $10,000 limit—and up from the initially proposed $30,000 cap in the current version of the bill. It's a meaningful concession to the so-called SALT Caucus, a group of mostly blue-state Republicans who have pushed for more generous relief for their constituents. But it remains unclear whether the $40,000 cap will go far enough. Some members, like New York Rep. Nick LaLota, had previously demanded increases as high as $62,000 for single filers and $120,000 for joint filers. Whether this new figure is enough to win their support is still a live question—and a critical one. The SALT Caucus has already proven its power by joining forces with budget hardliners to block an earlier version of the bill. If passed, the new cap would offer significant tax relief to a specific group of homeowners—primarily those in high-tax states who itemize deductions and pay well above $10,000 in property and income taxes each year. The cap would begin phasing down at $500,000 of income, but those below that threshold could claim up to $40,000 in deductions. Property taxes alone often exceed $10,000 in states like California, New Jersey, New York, and Connecticut. Add state income taxes, and many households could easily reach, or even exceed, the newly proposed cap. But note, the increased deduction is only relevant for taxpayers who itemize their deductions instead of taking the standard deduction. And the standard deduction is set to increase to $32,000 for joint filers (up from $29,200 in 2024) if the new tax bill passes. Michelle Obama Reveals Secret Obsession With HGTV as She Lifts the Lid on Her Favorite Property Show: 'My Version of Golf' 2 Southern States Lead the U.S. With the Highest Number of Foreclosures Middle-Income Homebuyers Are Facing the Biggest Shortfall of Affordable Homes
News.com.au
07-05-2025
- Business
- News.com.au
‘Dubious claims': What Aussies try to sneak past ATO
As Australians gear up for tax time, an industry body has revealed some of the most outrageous deductions workers have tried to claim. Chartered Accountants Australia and New Zealand tax leader Susan Franks said a client of one tax agent had tried to claim a luxury yacht as a work expense because they needed to do business on an island. Others have tried to claim engagement rings, hair cuts due to their hair growing at work and even pilates equipment due to a sore back. 'There were many dubious claims related to health, wellness and personal aesthetic, including one for the cost of a gym membership, as the individual needed to be strong and fit to renovate their rental property,' Ms Franks said. 'Another related to a pilates reformer machine purchased to help an office worker who had a sore back.' Ms Franks said some Australians tried to claim big-ticket purchases through loose links to their job or business. 'We also noticed a trend of big-ticket luxury purchases passed off as business and work expenses, including one who tried to claim a family trip to a tropical island was related to their earthmoving business,' Ms Franks said. 'Another claimed a luxury yacht as a work expense – because they might have some business to do on the islands.' She said taxpayers also tried to claim vet and food bills for pets, pools and school fees. Ms Franks said despite the temptation, Aussies should only claim fair tax-related expenses. 'We understand that some Australians might be tempted to push the boundaries, but let's avoid making dubious claims this year,' she said. Meanwhile, the Australian Taxation Office said this year it was taking aim at work-related and working-from-home deductions of the nation's 15 million taxpayers. According to the tax office, more than 10 million people claimed work-related deductions, including working-from-home claims, in the last financial year, although some Australians took it a little too far. One was a mechanic claiming an air fryer, TV, gaming console and other electrical items as work expenses, while another was a fashion industry manager wrongly claiming more than $10,000 in luxury-branded personal clothing and accessories. In another case, a truck driver tried claiming swimwear used to take a dip during a stop along the highway. ATO assistant commissioner Rob Thomson reminded taxpayers that the ATO's role was to collect the correct amount of tax owed, and exaggerated deduction attempts would not be tolerated. 'While some people have tried their luck with unusual work-related deduction claims, most people realise to be able to claim an expense, it needs to meet strict criteria,' he said. 'While a lunchtime dip might clear your head for work, swimwear for a truck driver is clearly not deductible.' Mr Thomson said if your deductions didn't pass the 'pub test', it was highly unlikely your claim would meet the ATO's strict criteria. 'Don't fall into the trap of thinking you can claim expenses like travel to and from work and childcare costs,' Mr Thomson said. 'These expenses are personal in nature and cannot be claimed. When in doubt, look for guidance on the ATO website or speak with your registered tax agent.'
