Taxes went up for some people in California’s 39th, but a bill that passed the House could save them significant money.
If you live in California’s 39th district, chances are you could save over $1,000 next year on your taxes if a bill that recently passed the House becomes law.
One part of the 2017 tax law from President Donald Trump essentially raised taxes for many in Los Angeles, Orange and San Bernardino counties, parts of which make up the 39th district. Under prior law, Californians could itemize state and local tax, or “SALT,” deductions with no cap. But Trump’s signature legislation capped the amount you can deduct, meaning millions of Americans are being double taxed.
Democrats like Rep. Gil Cisneros (CA-39) see fixing this as a top priority. Speaking on the House floor in favor of the legislation that passed the House in December, Cisneros said the SALT deduction changes have unfairly punished his constituents.
“Capping the deduction hurts homeowners and undermines state and local efforts to invest in our roads, schools, teachers, and first responders,” Cisneros said.
He added that because the SALT cap limit is the same for both individuals and joint filers, the 2017 law also “unfairly punishes married couples.”
But just how much does the SALT change hurt taxpayers in California’s 39th? Courier built a model to find out. First we looked at Census data on mean income in the district to determine an average tax rate of 20% to 25% for this deduction. Then using data from the Tax Policy Center on the average SALT deduction in 2016, we calculated that, on average, taxpayers who claim a larger SALT deduction could save between $1,144 and $1,429 per year on their tax bill. With that money, you could cover an entire month’s rent in a Yorba Linda studio apartment, or half a month’s rent in a larger rental home.
Jeff Katz, an estate and tax law attorney, said most of his clients were hit by the cap on SALT deductions, some to the tune of several thousand dollars. And, “as they’ve started to see a bigger and bigger bite” taken out of their tax returns, they’re beginning to realize how the myriad of new tax rules including the changes to SALT deductions have actually impacted them.
Property-owners with incomes between $100,000 and $200,000 who live in high tax states like California have taken the biggest hit as a result of the SALT cap, he said.
Clarification: This post has been modified to clarify there was no cap on SALT deductions prior to the new cap.