Raising SALT Cap to $20,000 Would Mostly Benefit High-Income Households

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• Raising SALT cap to $20,000 would increase federal debt by $225 billion from 2025-2034
• Nearly all the benefit would go to households making about $200,000 or more
• The change would cut household taxes overall by an average of about $100
• Almost none of the benefit would go to middle- or low-income households

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The Debate Over the State and Local Tax Deduction Cap

• The SALT deduction cap was originally implemented as a political maneuver by former President Trump, primarily targeting high-tax blue states like New York and California.
• Supporters of the cap argue that it helps increase federal revenue and only targets higher-income taxpayers, while critics say it's unfair since it's more harmful in states with higher costs of living and taxes.
• Removing the cap or increasing it would significantly benefit residents of states like New York and California, enabling them to deduct a larger portion of the taxes they pay throughout the year.

Source

Newsweek

The debate over raising the SALT deduction cap

• A group of Republican lawmakers, known as the "SALT Republicans," are pushing to either remove or substantially increase the SALT deduction cap, which is currently set at $10,000.
• Some lawmakers, such as Representative Mike Lawler of New York, have proposed raising the cap to as high as $100,000 for individual tax filers and $200,000 for joint filers.
• However, critics argue that increasing the cap would mainly benefit the wealthiest Americans and add billions of dollars to the federal deficit.

Source

Newsweek

New York Governor and Representative push for SALT deduction cap increase

• Representative Nick LaLota prioritizes a reasonable increase in SALT deduction cap over the number of bills
• New York Governor Kathy Hochul demands a full repeal of the SALT cap, which has cost New Yorkers up to $12 billion annually since 2018
• Republicans aim to settle their differences on the policy before Trump takes office to pass a reconciliation bill without Democrat support

Source

Newsweek

Impact of Raising the SALT Deduction Cap on Different Income Groups

• Households making $200,000 or less would see no change in their after-tax incomes if Congress increases the cap to $20,000.
• Those making between about $430,000 and $1 million (the highest-income 95-99 percent of households) would get a tax cut averaging nearly $1,400, or about 0.3 percent of their after-tax income.
• The average tax cut for married couples would be about $270. But middle-income couples would get a tax cut averaging about $10. Those in the 95th-99th percentile would get an average tax cut of about $1,500.

Source

Forbes

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