Projecting the TCJA Impact on the State Tax Deduction

The Tax Cuts and Jobs Act (TCJA) made significant changes to several areas of the tax code including the limitation placed on the State Tax Deduction. On its website, the IRS publishes data detailing the itemized deductions claimed for a given year by state. The most recently published year available is 2017, prior to the enactment of the TCJA. To project the impact of the TCJA on the State Tax Deduction, you have created the following Tableau visualization, which uses the following assumptions and calculations:

• Average Tax Rate: divides Income Tax Before Credits by Taxable Income Amount
• State Tax Deduction: sums State and local income taxes amount, Real estate taxes amount, and Personal property taxes amount

1. The State and local general sales tax amount was excluded from this analysis

• State Tax Deduction * ATR: multiplies the State Tax Deduction by the Average Tax Rate
• Impact: divides the State Tax Deduction * ATR by the Income Tax Before Credits
• Ranked Impact: orders the States from most impacted to least impacted (1-51)

Mouse over the visualization to reveal specific amounts for use in answering the following questions. Adjust the sliders on the visual to determine proper responses.

Required:

1. What are the top 5 states where residents of those states are most likely to have been the impacted as a result of the passage of the TCJA limitation on State Tax deductions?
2. What are the bottom 5 states where residents of those states are most likely the least impacted as a result of the passage of the TCJA limitation on State Tax deductions?
3. What is the percentage impact for Florida?
4. What is the average tax rate for taxpayers in Illinois?