Texan’s are proud people, and rightfully so. The Lone Star State offers everything from world-class rough and tumble football and rodeos to delicate bluebonnets and everything in between. These are just a few of the reasons the state is known for an “everything’s bigger in Texas” mentality.
Although generally a good thing, residents will soon be able to claim that everything really is bigger in TX — even the tax bill.
Why would the tax bill get bigger in Texas? The Tax Cuts and Jobs Act (TCJA) has led to many changes to the tax law. One area of note involves the changes effecting property taxes. In the past, the law allowed for the deduction of state property taxes. The TCJA caps this deduction to $5,000 for single filers and $10,000 for married filing jointly. This will likely impact home owners in high-property tax states, like Texas.
Texas property owners will also lose out on the ability to take a deduction for casualty losses. In the past, the Internal Revenue Service (IRS) has allowed for a tax deduction for losses connected to the destruction or damage of property due to an unexpected, sudden or unusual event. The law defined such events to include tornados, fires and floods — natural disasters that are not uncommon in Texas.
TCJA has removed this deduction. The only way the government will grant this deduction is in the event of a federal deemed disaster.
These changes will likely translate to a much larger tax bill for Texas residents. Taxpayers that are assessed a higher than expected tax bill have options. Legal representation can protect your interests during this type of tax controversy.