You might not have to include the refund next year. Since your SALT deduction was capped, if you subtract the tax refund from the taxes you claimed and you still had at least 10,000 of SALT taxes claimed, you shouldn't have to include the tax refund as income.
For instance, if you claimed 12,000 of SALT, but was capped at 10,000, and got back an 1800 refund, you have not realized any income. Your SALT limit (10,000) would still be greater than your adjusted SALT of 10,200. However, if your SALT was 10,500 before being limited, the 1800 of refund would adjust the SALT to 8700. In this case 1300 of the refund becomes taxable.
As far as adjusting your state withholdings are concerned, this will depend on your state. Some states have minimum requirements for withholdings that can't be adjusted lower. You will need to check with your state to find out what is allowed to lower your withholding amounts.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
