The GOP tax plan could go into effect as early as January 1, 2018 if the final bill passes.
Ahead of the changes, taxpayers can make end-of-year tax moves now, such as prepaying their property taxes for next year.
If your property tax bill is greater than $10,000, you'll be able to deduct more by paying next year's bill early.
It looks as if the Republican tax plan might become law before the end of the year.
For taxpayers who itemize their deductions, that could mean an increased tax bill in 2018. But there are some things you can do now to prepare for the changes, including maximizing your 2017 tax deductions.
Under current tax law, you can deduct taxes paid to state and local governments, including property, income, and sales tax. But the final GOP bill — the product of a compromise committee to reconcile differences in the House and Senate versions passed in those chambers — caps the deduction at $10,000, either for property taxes, state and local income taxes, or sales tax.
Homeowners whose property tax bill is more than $10,000 — and not subject to the alternative minimum tax — could save more money by paying next year's bill by December 31.
That way, you can get the deduction for that payment when you file your 2017 taxes — especially useful for homeowners in states with relatively high taxes, like New York, New Jersey, and California.
Deducting the full amount of your current property tax bill in 2017 might provide an even larger tax benefit if your tax rate goes down next year under the new plan, according to the experts at TaxAudit, an audit defense service.
What are property taxes?
Property taxes are just that: taxes you pay on your property.
There are two kinds of property taxes, depending on the property's mobility:
The real estate tax: for property that can't be moved, such as a house or land.
The personal property tax: for property that can be moved, such as an RV or a plane.
To get the property tax deduction, you have to itemize your deductions.
How do I pay property taxes?
Property taxes are administered on a local level, so to pay early, you'll have to check with your county to see how to do so.
But keep in mind that if you own a home, your mortgage lender might pay your property taxes from an escrow account.
Unfortunately, you can't pre-pay SALT anymore
We originally suggested that it might be worth it for some taxpayers to prepay their 2018 state and local income tax liability this year to maximize that deduction as well.
But that's no longer possible: the new bill says that state and local income taxes paid for any tax year beginning in 2018 will not be deductible on your 2017 taxes.
"As the Tax Cuts and Jobs Act seeks to simplify the tax code, a last-minute provision closed a potential new tax-planning strategy germinating before the bill even passed," Nicole Kaeding, economist with the Center for State Tax Policy at the Tax Foundation, said in a post.