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February 24, 2022 at 02:46 PM
What You Need to Know
- The latest state and local tax deduction bill would remove today's $10,000 cap for some taxpayers and raise the limit to $60,000 for others.
Two House Democrats have a new plan to provide a more generous state and local tax deduction, the latest in a string of such proposals that have largely been stymied along with the rest of President Joe Biden’s economic agenda.
The latest state and local tax, or SALT, deduction bill, introduced by Representatives Tom Malinowski of New Jersey and Katie Porter of California, would remove the current $10,000 cap entirely for those making less than $400,000 a year and raise the deduction limit to $60,000 for taxpayers making more than $400,000.
The cap would decrease by $10,000 for each additional $100,000 in earnings, which would phase it out for those earning more than $1 million.
The legislation also requires that anyone claiming the SALT deduction must attest that they do not have total assets worth more than $1 billion.
The $10,000 cap was part of the 2017 tax overhaul and is set to expire at the end of 2025.
By keeping it for some taxpayers, the lawmakers say their proposal would raise an estimated $150.9 billion over a decade. That could fund Medicare vision and hearing benefits, a key priority for many progressive lawmakers.
The SALT plan is unlikely to be taken up in Congress anytime soon. Biden’s Build Back Better agenda has been stalled in the Senate since December after Senator Joe Manchin of Virginia said he couldn’t support many of the spending programs in the bill.
