Recently, the House of Representatives passed their version of the President Biden-backed tax and spending bill, which is commonly referred to as the Build Back Better Act. One of the most impactful taxpayer-friendly changes present within the House’s version of the bill is an increase to the annual cap of deductible state and local taxes, or SALT, from $10,000 to $80,000 ($40,000 for married filing separately). This increase would extend through 2031 at which point the limit would revert back to $10,000.
While this legislation is not yet final, taxpayers who are able to defer payment of property taxes past December 31st, 2021 into 2022 could see a substantial tax benefit if the increase remains in the bill’s final version. As presently constructed, the cap adjustment would take effect January 1st, 2022, meaning any property tax payments made within calendar year 2021 would still be subject to the existing $10,000 deduction limit.
The latest reports indicate that the SALT cap increase will be one of the focal points amongst Senate members in their negotiations on the bill. Elliott Davis will continue to monitor the legislation’s progress and will keep you informed regarding any relevant updates. Please contact us or reach out to your tax for further information.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.