So by now you have surely heard that The Tax Cuts & Jobs Act Of 2017 has passed and major changes are on the way. Unfortunately, if you live in a high-income-tax state (like New York or New Jersey) you will probably be paying more in taxes. So, what can you do?
The new $10,000 cap on state and local income tax and property tax deductions will be especially painful. What’s even tougher is that this limit is on the combined total of property and income taxes, not $10,000 each. Also, the $10,000 limit is for both individuals and married couples (it’s not $20,000 for a married couple).
While the dollar amount of state and local income tax and property tax deductions that can be taken drops, the standard deduction rises (standard deduction will be $12,000 for individuals and $24,000 for married couples). So, you will need to now focus on the timing of your itemized deductions in order to maximize their effectiveness. In some cases it may make sense to itemize one year, then take the standard deduction the next, and switch back the following year. This could be accomplished by doubling on charitable donations in a calendar year.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Let’s take for example a married couple who lives in and owns a home in New York and donates $10,000 every January to charity. In the past, that amount, combined with their local income and property tax deductions, made it easy for them to eclipse the old standard deduction.
Now, with the $10,000 cap, itemizing may not be a possibility. However, if they decided to move that January 2019 planned contribution to December 2018, they would now have enough where itemizing made sense for 2018. Then in 2019 they could take the standard deduction, because they would not be making a charitable contribution in the calendar year. They would then continue to double up on their charitable giving in 2020 to once again itemize.
It’s nice to know that doing good for others with your charitable donations can also possibly do some good for your own bottom line. And it’s just one example of a strategy to keep your taxes in check in the new tax world.
-
Tariffs, Inflation, Uncertainty, Oh My: How to Feel Less Stressed About Finances Now, ReallyTariffs, high prices and an uncertain economy getting you down? These steps can help.
-
IRS Updates Capital Gains Tax Thresholds for 2026: Here’s What’s NewCapital Gains The IRS has increased the capital gains tax income thresholds for 2026. You'll need this information to help minimize your tax burden.
-
Your Estate Plan Isn't 'Done' Until You've Completed These Five Steps, From an Estate Planning AttorneyCongratulations on getting your estate plan in order. Now, you need to communicate the relevant details to ensure your plan is effectively carried out.
-
A Nightmare for Parents: How to Navigate the Legal Boundaries of Tenant Rights During a Family CrisisThis family's story illustrates how important it is to get help sooner rather than later and highlights the complexities of tenant rights and legal protections.
-
Eight Steps to Help Get You Through the Open Enrollment Jungle at WorkWondering how to survive open enrollment this year? Arm yourself with these tools to cut through the process and get the best workplace benefits for you.
-
Seven Moves for High-Net-Worth People to Make Before End of 2025, From a Financial PlannerIt's time to focus on how they can potentially reduce their taxes, align their finances with family goals and build their financial confidence for the new year.
-
I'm a Financial Planner: These Are the Seven Tiers of Retirement Well-BeingLet's apply Maslow's hierarchy of needs to financial planning to create a guide for ranking financial priorities.
-
Why More Americans Are Redefining Retirement, Just Like I DidRetirement readiness requires more than just money. You have a lot of decisions to make about what kind of life you want to live and how to make it happen.
-
A Compelling Case for Why Property Investing Reigns Supreme, From a Real Estate Investing ProInvestment data show real estate's superior risk-adjusted returns and unprecedented tax advantages through strategies like 1031 exchanges and opportunity zones.
-
Are You Retired? Here's How to Drop the Guilt and Spend Your Nest EggTransitioning from a lifetime of diligent saving to enjoying your wealth in retirement tends to be riddled with guilt, but it doesn't have to be that way.
