Tax Reform Tuesday: The Benefit of the Alabama Accountability Act. Will Other States Follow Suit?

Written on January 9, 2018

DID YOU KNOW? Under the new tax reform bill, the deductibility of state and local taxes are limited to $5,000 for those married filing single and $10,000 for all other taxpayers. Many high-income states are upset over this, including New York, where the Governor has threatened to challenge the new law as unconstitutional. However, Alabama, under the Alabama Accountability Act (AAA), has a unique opportunity to direct up to 50% of your Alabama tax liability (limited to $50,000) to a Scholarship Granting Organization. For federal purposes, your donation will be reported as a charitable contribution, rather than a state tax payment. The total statewide credit is limited to $30,000,000 and is on a first-come, first-served basis. We expect this amount to be utilized quickly so do not wait until year end to make your contribution. We also expect other states to implement similar programs to turn some tax payments into charitable contributions for state tax purposes. If you have questions, please contact your Warren Averett Advisor for more information.

 

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