The House version of the Build Back Better Act, residing in the Senate for consideration, contains a variety of provisions that we discussed in a previous blog, U.S. House Passed the Build Back Better Act – Waiting for the Senate to Weigh In. One particular provision is to raise the cap on the so-called state and local tax (SALT) deduction from $10,000 to $80,000 ($40,000 for single, married taxpayers filing separately and estates and trusts) for tax years beginning in 2021. The current version in the Senate, contains “placeholder” language for the SALT change, but no final compromise has yet been reached.
If this provision remains in the final version of the bill, it creates an opportunity to increase itemized deductions in 2021. Consideration Point: Taxpayers with fourth quarter state estimated tax payments, normally due January 15th, 2022, who have not yet reached the $80,000/$40,000 SALT deduction should consider the opportunity to accelerate their fourth quarter payment into 2021 and pay it by year-end, 12.31.2021.
Each taxpayer’s situation is different, so please consult your tax advisor for further guidance. You can also contact your BLS Team Member or our Advisory Team via our contact form to see how these potential changes might affect you.