Among the many changes the federal tax overhaul brings is the limit on the deductability of state and local income and property taxes. Whereas up until now there was no limit on how much in local and state taxes that individuals could deduct from the income, starting in 2018 that amount will be limited to $10,000.
While only state income tax on income earned in 2017 will be deductible from a taxpayer’s federal income, it seems likely that taxpayers will be able to deduct local property taxes paid by the end of 2017, including if they are for fiscal 2018 (so long as they have been billed by their municipality for the tax). While the IRS is still finalizing new regulations stemming from the tax overhaul, based on the assumption that pre-paid property taxes will be fully deductible, taxpayers would be able to deduct 18 months worth of property tax from 2017 income, thus lowering their tax liability.
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