With cap on deductions, lawmakers consider ways to help tax payers

  • by:
  • Source: CBS News
  • 04/09/2021
Some states are taking action against the new federal tax law to make sure as many Americans as possible receive benefits. With 30 percent of Americans itemizing their deductions, the new tax law puts a $10,000 cap on state and local tax deductions. Previously, there was no limit. 

That may mean higher taxes and a lot of confusion for some families, reports CBS News' Alex Wagner. New Jersey, New York, Connecticut, California, and Washington, D.C., have the highest average deduction claims.

Diana and Jeff Knight live in New Providence, New Jersey, with their three children. With major changes to the tax code, including a new limit on state and local tax (SALT) deductions, they worry about their long-term financial security. 

"In some regards, we make less now than we made three years ago," Jeff said. "When there's the potential for more money to be leaving your pocket, you know, obviously, that is going to raise concern for you."

"There's times where, you know, yes… we do… feel like we are swimming upstream a little bit," Diana said. 

The Knight family's annual deduction claims are about $18,000, near the New Jersey state average. 

"The kids are getting bigger. We'd love to do an addition on the house because we need space," Jeff said. 

"If we consider expanding on the house… then that also means that our property taxes would increase," Diana said. 

With the cap on SALT deductions, which includes property taxes, millions of Americans may end up seeing a tax increase. Lawmakers are considering different ways to help them.
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