You’ll Have to Wait Out the New Tax Deduction Li …

BY STEVE DINNEN

For all of you who ended up losers by way of the new tax bill, take heed: It’s not forever. Corporate tax rates were changed forever. Personal tax deductions and changes not so—they are temporary and expire at the end of 2025.

This means, for example, that the $10,000 deduction limit on itemized returns pulled from SALT—state and local income taxes—will lapse at that time, and starting in 2026 the cap goes away. Ditto for changes to the alternative minimum tax calculation and lifting of estate tax exemptions.

In some cases, there are a few twists to your approach to taxes. Take mortgage interest deductions, for instance. The old limit was that $1 million of mortgage interest was deductible. Now, it is $750,000. But lawmakers pegged the start date at Dec. 15, 2017, unlike other changes that did not take effect until this tax year, starting Jan. 1.

The $1 million interest rate cap was grandfathered in for qualifying mortgages that were taken out anytime before Dec. 15. That applies even if they are refinanced during the “temporary” change period that expires at the end of 2025.

Obviously, you can still acquire a $1 million mortgage. You just can’t deduct interest on any more than $750,000. Once we get to 2026 you can go back to the $1 million limit on the same mortgage. So hang tough.