- Mark Wilson
Part of President Donald Trump’s tax reform outline released on Wednesday would do away with itemized deductions on individuals’ tax returns except for the mortgage and charitable giving deductions.
Here’s a rundown of the itemized deductions this plan would cut:
Deductible state and local taxes: Currently, individuals are allowed to deduct their state and local taxes from their federal tax payments. This includes:
Personal property taxes: Allows deductions of state and local taxes on items like a boat or car. Real estate taxes:Allows deductions of state and local taxes on the “value of real property.”Income taxes: Allows deductions of taxes on wages and other income paid to the state or local government. Sales taxes: Can deduct sales taxes paid instead of income taxes. This is mostly used in stats without a state-level income tax like Texas.
Gambling losses: Losses due to legal gambling can be deducted currently, as long as they are itemized. Interest expense: Interest paid on a debt, such as a student loan or mortgage, can be currently deducted. You cannot deduct interest on a personal car loan or credit card debt. Union and/or Club expenses: If membership in a union, professional society, or chamber of commerce “helps you do your job,” the membership fee can be deducted. Moving expenses: If you moved for a new job, the cost of moving can be deducted if itemized.Miscellaneous expenses: If an expense on the Internal Revenue Service’s list, including tax preparation fees and unreimbursed employee expenses, accounts for more than 2% of a filers gross income, it can be deducted.
The Trump outline is not a finalized plan, and the White House said they could change the plan as they work with Congress, so it is not a guarantee if these deductions will ultimately be eliminated.