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State and Local Taxes

State and Local Taxes

Currently, for tax years beginning after December 31, 2017 and before January 1, 2026, deduction of the state and local taxes (state income taxes, sales taxes, personal taxes and property taxes) are limited to $10,000 for married filing jointly and $5,000 for others. These limitations do not apply to such taxes paid in the course of a trade or business. There are nuances that tax professionals should be aware of.

Background: Under old law, taxpayers could itemize and deduct taxes they paid for state income taxes, local taxes, sales taxes, real estate taxes and personal property taxes, from their income.  There were no limitations on the amount, although, these taxes were subject to Alternative Minimum Tax (AMT).

 

Zaher Fallahi, Tax Attorney, CPA, is a Tax Controversy Attorney, and defends taxpayers in resolving their Income Tax and Offshore Accounts (FBAR and FATCA) problems. Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), e-mail [email protected]