The recently enacted PATH Act (Protecting Americans from Tax Hikes Act of 2015) made one tax break permanent that can be valuable to individuals residing in states with no or low income taxes.
The break, which had expired December 31, 2014, allowed taxpayers to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes. This break can be valuable to those residing in states with no or low income taxes or who purchase major items, such as a car or boat.
What does this mean to you? You have the potential to save more by deducting sales tax on your 2015 return. Don’t worry — you don’t have to have receipts documenting all of the sales tax you actually paid during the year to take full advantage of the deduction. Your deduction can be determined by using an IRS sales tax calculator that will base the deduction on your income and the sales tax rates in your locale plus the tax you actually paid on certain major purchases.
Questions about this or other PATH Act breaks that might help you save taxes on your 2015 tax return? Contact me at firstname.lastname@example.org or your Berdon advisor. We can help you identify which tax breaks will provide you the maximum benefit.
Hal Zemel, a Tax Principal at Berdon LLP, has more than 20 years of experience in public accounting and advises businesses in the real estate, service, and manufacturing sectors.