INDIANAPOLIS (WISH) — After the tax law passed you may have heard about lines at tax offices to pre-file their taxes. That was thanks to a new limit on how much you can deduct federally through state and local taxes.
If you itemized your taxes, you used to be able to deduct pretty much an unlimited amount off. You could pick two of the three: property, income and sales tax. It would lower your taxable income on your federal taxes.
But starting next year, you will only be allowed to deduct up to $10,000.
Even though the average Hoosier household will be below that $10,000 threshold, some Hoosiers will not.
For example, for a pediatrician and firefighter making $250,000, living in an Indianapolis home worth $250,000, they would have a total property and income tax total of just over $11,000.
Starting next tax season, this family will only be able to deduct $10,000 of that.
“There’s really no way to offset it, it is truly a — the deduction will be limited,” said Chad Halstead, a partner at Katz, Sapper & Miller, a CPA and tax firm in Indianapolis.
But Hoosiers, remember, tax experts say doubling the standard deduction helps soften the blow, because a couple now has $24,000 in income, instead of $12,000 that remains tax-free.
For individuals, the standard deduction is now $12,000 instead of $6,000.
We’re examining the new tax law every Monday this month. Got a question for Eric?