Tax

State And Local Tax (SALT) Deduction Caps May Get Another Look

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As part of the Tax Cuts and Jobs Act (TCJA), Congress capped the amount of state and local taxes (SALT) that taxpayers can deduct on their federal returns. Taxpayers who were impacted complained that they were unfairly targeted, and some scrambled to find ways to protect the deduction (including filing lawsuits to protect workarounds). Now, those concerns are going back to Congress as Democrats on the House Ways and Means Committee have promised to revisit the cap on SALT deductions.

If that feels like déjà vu all over again, it is. In June of 2019, the Select Revenue Measures Subcommittee held a hearing on the matter. One of the issues raised at that time tackled an oft-cited statement that the SALT deduction primarily benefits higher-income taxpayers. In 2018, the Joint Committee on Taxation reported that 22% of taxpayers who claimed the SALT deduction in 2017 (before the impact of the TCJA) reported more than $200,000 in income.

However, House Ways and Means Select Revenue Measures Subcommittee Chairman Mike Thompson (D-CA) argued in June that looking at the numbers of affected taxpayers alone was shortsighted, adding, “Although the direct benefits of the SALT deduction primarily fall to upper-income taxpayers, the deduction supports state and local government budgets, whose expenditures support programs with widely-shared benefits, like public schools, infrastructure, first responders, and health care programs.”….Read more>>

 

Source:-forbes