The recent tax reform bill has passed and new standards will soon go into effect. One of the most controversial components has been the capping of SALT deductions at $10,000. Which states will be the hardest hit? Mostly the coasts.SALT, or “state and local taxes” are typically deductible on a federal income tax return. However, the new tax plan removes this capability. For individuals in state’s with high state and local taxes, the capping of SALT reductions will be felt come tax time.
Which States are Hardest Hit?
The most impact will be felt in coastal states such as California, New York, New Jersey, etc. These are states with large urban centers as well as typically high state and local taxes. States in green will be relatively unscathed while states that trend towards red will be the hardest hit.
To mitigate this impact, some states are considering reducing state income taxes to more beneficial levels.
Effects on the Housing Market
To some, tax policy is a driving force for the housing market which is still swinging back from the 2008 recession. The tax policy set to take effect may have a positive impact on home sales because it reduces individual taxes and will lead to more disposable income.
On the other hand, the change to SALT deductions as well as a reduction in mortgage interest deduction from $1 million to $750K. This may cause homeowners to forgo itemizing their deductions.
Whatever the impact, one thing is certain. Taxes have an impact on home ownership and are one of many factors to consider when choosing where to live.
City vs City is a powerful cost of living calculator that allows you to compare your current city to another of your choosing. Our app’s patent-pending technology will calculate your current cost of living. Then, we’ll show you what it could be in a different state.
We look at income, expenses, savings, and yes: state and local taxes as well. If you’re considering a move, don’t be without City vs City by your side.