Federal Deductibility of State and Local Taxes: Updated Report from Congressional Research Service

• Taxpayers who itemize can deduct state and local taxes from federal income
• SALT deduction shifts burden of state and local taxes to federal government
• High-income taxpayers and those in high-tax areas benefit most from SALT deduction
• TCJA established SALT cap of $5,000 for married taxpayers filing separately and $10,000 for others
• Changes in TCJA have reduced number of taxpayers claiming SALT deduction
• Recent proposals include making SALT cap permanent, raising and extending the cap, and capping the effect of SALT deductions
• Limiting SALT deduction could result in state and local spending declines
• Expanding SALT deduction benefits would place greater burden on low-income taxpayers and those in low-tax states.

Source: crsreports.congress.gov

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.

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