ROCHESTER, N.Y. — Significant tax changes may be on the horizon, causing concern among taxpayers and accountants alike. News10NBC's Deanna Dewberry spoke with a prominent local CPA to highlight the importance of this year's Congressional decisions regarding the Tax Cuts and Jobs Act.
The Tax Cuts and Jobs Act, which went into effect on January 1, 2018, will expire at the end of this year. Congress faces the choice of letting it expire, extending it, or amending it. This decision has major implications for those who pay taxes, especially those who prepare taxes.
The act, often described as a fundamental overhaul of the tax system, lowered tax rates, doubled the standard deduction and child tax credit, and expanded inheritance tax exemptions. However, the federal deduction for state and local taxes (SALT) is also capped at $10,000, impacting many New Yorkers and residents of other high-tax states.
“This was a big change for many middle- and upper-class taxpayers in 2017 and 2018,” said Jim Schnell, tax partner at MMB + Co LLP. “There, property taxes and New York state income taxes were capped at $10,000 a year. For a lot of people, that was a big change.”
The standard deduction has been doubled to offset the SALT deduction cap. Nevertheless, opposition to the cap continues, and President Trump has promised to eliminate it.
Ultimately, the decision rests with Congress. Lifting the cap would primarily benefit the highest earners, but other potential changes, such as adjustments to the standard deduction, could also have an impact, according to nonpartisan groups such as the Tax Policy Center and the Tax Foundation.
Until Congress makes a decision, there will still be tax uncertainty in 2025, and many accountants are worried.
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