PORTLAND, Ore. (KOIN) — The massive tax reform bill recently passed in the US Senate on a 51-49 vote would do many things, including removing a deduction for state income taxes on your federal return.
The Oregon Legislative Revenue Office in Salem estimates a family earning less than $75,000 could see a tax hike of about $1200.
“In Oregon and Washington, for instance, a lot of middle class and upper-middle class people take state and local taxes and deduct them, sales tax in Washington, income tax in Oregon,” said political analyst Jim Moore. “Under the Senate plan, that will be going away. Your standard deduction will be going up so for most people they’re going to pay more taxes, but not that much more in taxes.”
While the Republican tax bills would cut back allowed deductions, more people will likely decide to take the standard deduction instead — for a big reason.
“What we will likely see is folks who currently itemize their deductions, they may all of sudden decide it’s more beneficial to take the standard deduction because the standard deduction will almost double for each filing tax status,” CPA Katie Eyre told KOIN 6 News.
That’s good news for lower income tax payers who don’t itemize deductions. But with all this happening at the end of the eyar, tax accountants have some advice for taxpayers, especially if you pay your property tax in installments.
“If they’re paying property taxes on installments they might want to see if they can pay it by December 31, 2017 because they stand to risk losing it by 2018,” Eyre said.
Tax experts say you may want to consider preparing all of your state income tax owed by the end of the year to make sure you get the deduction.
Oregon is just one of a few states where you can deduct all your state taxes on your federal return. Eliminating that deduction affects a lot of Oregonians — 40% of Oregon taxpayers claimed that state deduction.