usmbguest5318
Gold Member
There's been much talk from advocates of the State and local tax (SALT) limitation on tax deductibility. The current GOP plan limits the SALT itemized deduction to $10K. That seemingly denies some measure of the SALT deduction folks take for their million-dollar-plus homes.
Well, it doesn't really work out that that is the case. The GOP tax bill (post committee), based on what my tax planner/advisor tells me, has a tiny exception that results in a huge "no difference from before" loophole. The exception allows for the full deductibility (no ceiling) for SALT paid or accrued in carrying on a trade or a business ... [or on expenses related to] production of income.
Some of you may recall Trump asserting that the GOP plan was going to "cost [him] a fortune, believe me, believe me." Notwithstanding that he's not identified specifically what provisions of it are going to cost him anything, much less a lot, one can be sure that the SALT provision isn't among those that will increase his tax liability.
FWIW, neither will dropping the pass-through marginal tax rate to 20%. Currently, people in Trump's assumed income bracket are subject to a marginal tax rate of 39.6%. Of course, one need not have anywhere near as apparently high a taxable income as Trump to be in the 39.6% bracket. Barely rich folks who have taxable incomes of $500K or so also are in that bracket.
Well, it doesn't really work out that that is the case. The GOP tax bill (post committee), based on what my tax planner/advisor tells me, has a tiny exception that results in a huge "no difference from before" loophole. The exception allows for the full deductibility (no ceiling) for SALT paid or accrued in carrying on a trade or a business ... [or on expenses related to] production of income.
- What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid.
- To whom does that apply? It applies to a ton of people; pass-through entities are the most common form of business entity. If you are a partner in a firm, it applies to you. If you are a sole proprietor, it applies to you. If you are part owner in an S-corp, it applies to you. If you are like most such business owners, at the very least you live in a home and own business property for which the property taxes greatly exceed $10K/year. If you're doing fairly well, you own a second or third home, which surely puts your SALT payments above $10K. Well, worry not, you aren't going to lose that deduction.
Some of you may recall Trump asserting that the GOP plan was going to "cost [him] a fortune, believe me, believe me." Notwithstanding that he's not identified specifically what provisions of it are going to cost him anything, much less a lot, one can be sure that the SALT provision isn't among those that will increase his tax liability.
FWIW, neither will dropping the pass-through marginal tax rate to 20%. Currently, people in Trump's assumed income bracket are subject to a marginal tax rate of 39.6%. Of course, one need not have anywhere near as apparently high a taxable income as Trump to be in the 39.6% bracket. Barely rich folks who have taxable incomes of $500K or so also are in that bracket.