- Policymakers are debating changes to the state and local tax (SALT) deduction limit in a new tax bill.
- The SALT deduction cap was set at $10,000 by the Tax Cuts and Jobs Act (TCJA) in 2017.
- The cap is set to expire at the end of the year along with other TCJA individual tax changes.
- Higher-income taxpayers in high-tax areas are most affected by the SALT cap.
- Lifting the cap would mainly benefit higher earners and make the tax code more regressive.
- The House bill proposes raising the SALT cap to $30,000 for most taxpayers, with new income limits for those earning over $400,000.
- This change would provide a $175 billion tax cut over 10 years compared to the current cap.
- Some propose even higher SALT caps, which would significantly reduce revenue and worsen deficits.
- The debate includes fairness issues, but many taxpayers could not deduct SALT even before the TCJA.
Source: taxfoundation.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
