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May 23, 2018
2018-1090

IRS issues notice on state and local tax deductions

The Treasury Department and IRS today on May 23, 2018, issued Notice 2018-54, stating that proposed regulations will be issued addressing the deductibility of state and local tax payments for federal income tax purposes and informing taxpayers that federal law controls the characterization of the payments for federal income tax purposes regardless of the characterization of the payments under state law.

An IRS news release said in response to the Tax Cuts and Jobs Act $10,000 limit on the amount of state and local taxes an individual can deduct in a calendar year, some state legislatures have adopted or are considering legislative proposals allowing taxpayers to make payments to specified entities in exchange for a tax credit against state and local taxes owed.

The upcoming proposed regulations, to be issued in the near future, will help taxpayers understand the relationship between federal charitable contribution deductions and the new statutory limitation on the deduction of state and local taxes, IRS said.

The news release is attached.

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   • Any member of the group, at (202) 293-7474;.

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ATTACHMENT

News Release

 

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