Learn four ways the January 1, 2018 Delaware tax changes may impact your federal and state taxes.
First, let me state I am a Real Estate Broker, not a tax or financial expert. I do, however, want to bring to your attention certain tax changes that might affect you if you live in Delaware. The good news: recent changes will affect you far less than it would if you were living in many of our surrounding states and places you may have lived in the past.
- Let’s start with SALT, the new Federal $10,000 limit on State and Local Tax deductions. If you live in Delaware, do you know anyone who pays more than $10,000 in State and Local Taxes? I have never seen a property tax anywhere near that number, but yesterday I had a call from a woman in Westchester County in New York who pays $23,000 a year in property tax. Now she can only deduct $10,000 on her Federal Income Tax Return. You can see more about this in the recent Ask The Broker video we published regarding SALT here: The SALT Deduction – How Changes Will Affect Homeowners In Delaware
- The Delaware estate tax has been repealedeffective January 1, thanks to legislation signed last year implementing a recommendation of a state advisory committee.
- Senior School Tax – Homeowners age 65 or over are eligible for a tax credit against regular school property taxes of 50 percent (up to $400). This credit may only be used against property taxes on a primary residence. On July 17, 2017 Governor Carney signed HB 99 which made the following changes to the State’s Senior Property Tax program:
Ten-year Residency Requirement for New Applicants: Individuals who establish legal domicile in Delaware on or after January 1, 2018 will be required to have been legally domiciled within the State for a period of at least 10 consecutive years in order to be eligible to receive a credit. Individuals who establish legal domicile in Delaware AFTER December 31, 2012, but prior to January 1, 2018 will continue to be required to have been legally domiciled within the State for a period of at least 3 consecutive years in order to be eligible to receive a credit. Individuals who have established domicile in Delaware prior to January 1, 2013, will be eligible to receive the credit in the ensuing tax year.
I doubt the loss of a $400 credit will cause someone to move back to New Jersey or New York, but I did want you to be aware of the changes.
- State Income Tax Brackets have changed and the highest rate is now 6.6% for taxable income above $60,000.
Here are some sources for additional information, but please talk to your accountant to make sure you understand how both Federal and State tax changes will affect you. We are feeling quite confident at Active Adults Realty, how about you?
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