In which year is the Jan estimated state income tax deductible?

It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.

Ira Smilovitz, EA Leonia, NJ

With the $10K limit on SALT deductions, and the $25K standard deduction for MFJ, how often does it make any difference?

I would think close to never. If you have enough deductions to be worth itemizing, you probably have paid $10K of SALT long before the last estimated payment.

I was thinking of the potential increase in the cap on SALT; but it looks unlikely to pass this year. Does anyone think that f it pass early in 2022 that it would be effective as of 2021?

TIA

You are correct that it rarely makes a difference with the SALT cap, but the cap is only temporary (it is scheduled to sunset in 2025) and my clients tend to be repeat clients. I like to keep them trained to do things that make my life easier.

Ira Smilovitz, EA Leonia, NJ

I am keeping optimistic that it will retroactive as long as it passes in Q1. SALT cap hit me hard, and I am not a 1%er. I just live in a town with high property tax. Friend a few towns over, has a similar value house and his tax is 1/2 mine.

It will start making a difference again in 2026 when the 2017 change to individual tax law, including the SALT cap, sunset.

Raising the SALT cap was being discussed in the negotiations around the BBB legislation that did not pass this year. Conceivably it could pass in some form next year.

If you're in a position where a state tax payment in December would not be deductible under current rules, but might be deductible in January if they raise the cap in 2022, then it probably makes sense to delay the payment until January just in case.

Of course there are other possibile things Congress could do such as raising the cap retroatively, or inventing new ways to penalize anyone paying state taxes next January, but those are far less likely to happen.

Scott