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Are Property Taxes Deductible from Federal Income Tax in California?

Updated: Mar 26

Taxes are rarely simple. Many taxpayers turn to tax attorneys and other experts to help them get it right when filing their taxes. Nobody wants to file inaccurate taxes and possibly be hit with penalties. However, everybody wants to maximize their deductions to minimize the amount of money they owe to the government. Property taxes in California and many other states can be deducted from your overall taxable income. However, depending on your tax situation, this may or may not be the best idea.

Generally, California taxpayers may deduct the amount of money they have paid towards their property taxes from their taxable income. This effectively reduces the amount of income the federal government can tax and reduces the amount of tax they must pay. As of 2024, the maximum amount of property taxes you may deduct is capped at $10,000. However, you may only claim this deduction if you take the itemized deductions instead of the standard deduction. In some cases, the standard deduction may be more beneficial.

Every year California citizens are required to pay their taxes. For many taxpayers, especially those with multiple streams of income or otherwise complicated financial assets, it can be a major pain. Avoid the headache of doing your taxes by calling our

California tax attorneys for guidance. Call the NewPoint Law Group, LLP for help with your taxes and determining what kinds of deductions you may claim. Call 800-358-0305 to set up a legal consultation with our experienced team.

Deducting California Property Taxes from Federal Income Tax

As of 2021, California property owners may deduct up to $10,000 of their property taxes from their federal income tax if they are filing as single or married filing jointly. Unfortunately, any property taxes you have paid in excess of $10,000 cannot be counted toward your deduction. The cap is only $5,000 if you are married filing separately, but each spouse may claim $5,000 for a total of $10,000.

Deductions are important because they can lower your overall taxable income. For example, a person who earned a total taxable income of $100,000 and applied the property tax deduction of $10,000 would only have to pay taxes on $90,000 of income.

There are many different kinds of deductions that may be available to you. The more you can deduct from your taxable income, the less money you may owe the government. This is why it is crucial to speak with a legal tax expert, so you do not miss any deductions you are eligible to take advantage of. It is also important because you do not want to mistakenly apply a deduction you are ineligible for and face penalties. Our Sacramento tax lawyers can help guide you through this complicated process.

Limits on Deducting California Property Taxes from Federal Income Tax

As stated above, a single person or a married couple filing jointly may only claim a total of $10,000 as a deduction for property taxes. The limit drops to only $5,000 for married taxpayers filing separately. However, each spouse may claim that $5,000 for a total of $10,000 for the household. Any property taxes you pay exceeding this limit cannot be counted toward your deduction.

If you have been paying property taxes and applying the deduction for the past few years, you should know that this $10,000 cap on property tax deductions is relatively new. In years past, there was no limit and all property taxes paid could be applied to your deduction. For people who paid hefty property taxes, this was a significant deduction on their taxes.

However, in 2017, former President Donald Trump signed the Tax Cuts and Jobs Act and imposed new limitations. As it stands today, taxpayers must abide by the $10,000 cap. If you previously claimed the unlimited deduction, your taxes might look very different from now on, so it is crucial to discuss them with our California tax attorneys.

You must claim the itemized deductions when filing federal income taxes to claim the property tax deductions. Generally, taxpayers may choose either the standard deduction or the itemized deduction. Most taxpayers choose whichever gets them a greater deduction. The standard deduction is available to all taxpayers no matter what kinds of deductions they may be eligible for. Itemized deductions are unique to each taxpayer and will look different depending on what kind of deductions they can claim. Speak with our Vacaville tax lawyers about applying deductions to your taxes.

Deciding Between the Standard or Itemized Deductions When Filing Taxes in California

When filing your federal income taxes, you may take the standard deduction available to everyone or an itemized deduction more tailored to your individual tax situation. A person may include many different types of deductions if they take the itemized deduction. People who choose the itemized deduction over the standard deduction are often business owners who deduct certain operating costs from their taxes. Speak to our California tax attorneys to determine if the itemized deduction is right for you.

As of 2024, the standard deduction is $14,600. This means $14,600 will be deducted from your taxable income no matter what kind of deductible expenses you may or may not have incurred. People with nine-to-five jobs and less complicated finances usually take the standard deduction. To make your property tax deductions worth your while, you will need another deduction of at least $4,600. If your itemized deductions do not amount to at least the standard deduction, it may not be worth claiming.

Essentially, deducting property taxes is only worth your time if your total itemized deductions exceed the standard deduction. Our Stockton tax attorneys can help you comb through your financial records and find any potential tax deductions you may be eligible for.

Contact Our California Tax Attorneys for a Consultation

California citizens must pay their federal income taxes every year. The headache of figuring out your tax situation and pouring over your possible deduction will haunt you annually. Let our California tax lawyers ease your burden. Schedule a consultation with our team at the NewPoint Law Group, LLP by calling 800-358-0305.

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