Representative Bill Pascrell, DN.J., speaks at a news conference announcing the State and Local Tax Caucus outside the Capitol on April 15, 2021.
Sarah Silbiger | Bloomberg | Getty Images
a group of bipartisan house representatives relaunched The SALT Caucus last week sought relief from the $10,000 limit on the federal deduction for state and local taxes.
enacted through the former President Donald Trump‘S 2017 tax overhaulstate and local tax caps has been a major issue For some lawmakers in high-tax states such as New York, New Jersey, California and Illinois, residents cannot deduct more than $10,000 in state and local levies on their federal returns.
Without an act of Congress, the $10,000 cap will expire after 2025, but members of the SALT Caucus want to see that change soon. He has also vowed to fight efforts to raise the cap.
“Reinstating SALT will put more dollars back into the pockets of hardworking families who are already struggling with high costs,” Rep. Josh Gottheimer, D.N.J., SALT Caucus co-chair, said at a press conference last week. Said.
With a slim Democratic House majority, the SALT cap was a sticking point during the Build Back Better talks, and in November 2021 lawmakers passed a $80,000 SALT CAP BY 2030 as part of their spending package. But Sen. joe manchinDW.Va., blocked the spending package in the Senate.
Getting traction for SALT relief can be tough
With more delegates from New York and a narrow House Republican majority, the SALT caucus is expected to make progress before the end of 2025.
Jamie Yesnowitz, head of state and local taxes at accounting firm Grant Thornton and leader of the National Tax Office, said repealing the SALT cap could be a challenge in the current Congress.
The proposals include raising the limit, adjusting it based on income or doing away with it altogether. But without an integrated approach, he said it would be difficult to gain traction.
“Right now, there’s a lot to choose from,” Yesnowitz said.
“The first step is to try and find an approach that can move forward,” Yesnowitz said. “But even after that, it’s a question of when it can be brought to a vote because there haven’t been a lot of opportunities.”
“At this point I don’t see a way out,” he said, pointing to more pressing issues such as debt negotiations. “But you never say never in these situations.”
Over 30 States Have SALT Cap Workaround
Meanwhile, more than 30 state and local jurisdictions, including New York City, took measures For owners of so-called pass-through businesses such as partnerships, S-corporations and some LLCs, according to grant ThorntonAnd more may join in 2023.
It is estimated to cost the federal government $50 billion in lost revenue by the end of 2025, with the largest gains flowing to pass-through business owners making $1 million or more. research From New York University School of Law Professor Daniel Hemel.