How Does the $10,000 Limit on State and Local Tax Deductions Work?
State and local governments generally charge some type of taxes on their citizens in the form of property taxes, sales taxes, or state income taxes. Traditionally, those who paid these taxes were eligible to deduct the amount of their payment from their income on the federal level. The deduction of state and local taxes is abbreviated as the SALT deduction, and it's available to those who itemize on their federal tax returns.
In 2017, however, the Tax Cuts and Jobs Act passed and reformed federal tax law. One of the biggest changes was a limitation on the SALT deduction, which went into effect in 2018. This change made it so that itemizing no longer makes sense for many -- and it also caused millions of Americans to lose a substantial portion of their deductions.
Here's how it works.
Source Fool.com
