The recent state and local tax (or SALT) deduction cap is pushing some residents out of states with higher tax rates, and some believe it will get worse.
The 2017 “Tax Cuts and Jobs Act” introduced a $10,000 limit on SALT deductions, and the consequences are now becoming apparent. Some Americans are responding to the change by moving into states where they can limit their government fiscal liabilities.
“It took a few months for taxpayers to realize the dollar implications – until they actually filed their tax returns this year,” Friedman LLP principal Alan Goldenberg told FOX Business. “It quantified the impact of the loss of the SALT deduction when people saw it in front of their eyes on their tax return.”
New York, New Jersey, and California are among the states losing the most residents to the change. Florida, Texas, and Nevada are the most popular destinations, asking no individual income tax. New York has hemorrhaged nearly half a million of its residents, while blocking a tax rate workaround that would have eased the burden.
In an unusual twist, Democrats have said they would try to undo the cap on state and local tax deductions. New York Governor Andrew Cuomo reportedly said the changes “would lead to a decline in revenues in the state because taxpayers would leave.” The Treasury demurred, saying only that it would “continue to evaluate the issue and release further guidance if necessary.”