Trump capped state tax deductions at $10,000, but the Golden State has a plan California Senate leader Kevin de Leon unveiled legislation on Thursday that would help California get around the new cap on state and local (SALT) tax deductions, one of the more consequential measures for homeowners in President Trump?s tax bill.
Under the plan, Californians would make a ?charitable donation? to the California Excellence Fund, which would give taxpayers dollar-for-dollar state tax credit. Taxpayers would use the credits to get out of paying SALT taxes, rendering the $10,000 cap on SALT deductions in the new tax law moot.
?The Republican tax plan gives corporations and hedge fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,? de Leon said in a statement. ?We won?t allow California residents to be the casualty of this disastrous tax scheme.? Prior to the new tax law, taxpayers could deduct any state and local property or income taxes from their federal tax returns. The new law puts a $10,000 cap on such deductions. For most states and taxpayers, this doesn?t matter?some states don?t have income taxes, for example.
But in cities with expensive housing markets in high-tax states, the cap could lead to huge tax bills. The markets most affected by the change are coastal cities that tend to vote for Democrats, as lawmakers in those states have accused Republicans of weaponizing the tax code against Democrats.
According to The Mercury News, ...