LUBBOCK COUNTY, TX (KCBD) - Some homeowners are rushing to pay their 2018 property taxes early in order to take advantage of a deduction that is being scaled back under the new tax law, which goes into effect January 1.
The approved tax reform puts a $10,000 cap on deductions for state and local income.
That cap combines local property and income taxes, which has homeowners in high-tax states scrambling to prepay next year's property taxes to save money.
However, the IRS is now clarifying who qualifies. They say prepaying property taxes could work, but only under limited circumstances.
To avoid the cap, homeowners must pay taxes that have been assessed this year, meaning those who prepaid based on estimates will likely be ineligible.
While lines are wrapping around tax collector's offices in some counties across the country, that is not the case at the Lubbock Central Appraisal District.
"We've taken quite a few phone calls," said Tim Radloff, Chief Appraiser at L.C.A.D.
"The last week of December is typically pretty busy for us...property owners are coming in to pay their taxes so they can file it on their 2017 tax return," Radloff said.
However, the phone calls coming in to his office are not about 2017 property taxes, but requests to pay 2018's property taxes now.
"Folks have been asking about it, and we have informed them that because we do not establish escrow accounts, we cannot take those prepayments," Radloff said.
Congressman Jodey Arrington says the $10,000 cap will not impact the majority of his constituents.
"That will cover all of our median income folks, but it covers 95 percent of West Texans," Radloff said.
The legislation cuts both business and individual taxes as part of the biggest tax revamp in decades, a historic moment for President Trump, who said he wanted to give American tax reform just in time for Christmas.
"We hadn't had a tax reform in over 30 years, and there just wasn't the pro-growth tax code that we needed," Arrington said.
"I think we spend $100 billion annually, families do, to do their taxes, and now nine out of 10 can do their taxes on effectively, what is on the back of a postcard," Arrington said.
Arrington said this is a "pro-Texas tax reform bill" because it provides farmers and ranchers and other small business with 100 percent immediate expensing. That provides incentives for them to write off new farm equipment or used farm equipment.
Arrington said he hopes the momentum from the success of this tax reform will push them into the new year where one of the first things to tackle is adding cotton to the farm bill.