House Lawmakers Relaunch Caucus to Raise SALT Cap
- Last week, a group of bipartisan House members relaunched state and local tax caucus. They called for relief from the $10,000 federal deduction for state taxes and local taxes.
- Certain lawmakers from high-tax states have made this a central issue because taxpayers are limited to a maximum of $10,000 in state and local levies.
- But, it may prove difficult to repeal SALT’s deduction limit without a single proposal and few votes.
A group of bipartisan House Representatives relaunched The SALT caucus voted last week in favor of removing the $10,000 cap on federal deductions for state taxes and local taxes.
Acted through former President Donald Trump‘s 2017 tax overhaulThe state and local tax caps It has been a crucial issue For certain legislators in high-tax state like New York, New Jersey or California, residents can’t deduct more that $10,000 in state and local levies in their federal returns.
The $10,000 cap will expire without Congress’s intervention after 2025. However, members of the SALT caucus would like to see changes sooner. They also vow to fight any attempt to raise the cap.
“Restoring SALT will get more dollars back into the pockets of hardworking families who are already struggling with high cost,” Rep. Josh Gottheimer (D-N.J.), was the SALT caucus chair at a press conference last Wednesday.
A slim Democratic House majority made the SALT cap a sticking point during Build back Better negotiations. Fortunately, lawmakers in November 2021 approved it. Limit of $80,000 in SALT by 2030 in their spending package. But Sen. Joe ManchinD-W.Va., blocked Senate spending package
SALT relief might not get the traction they desire.
The SALT caucus has more New York representatives and a smaller House Republican majority. It hopes to make progress by 2025.
Jamie Yesnowitz is principal of state and local taxes at Grant Thornton and leader of the national tax office. He said that repealing SALT may prove difficult in this Congress.
Some proposals include raising the limit or adjusting it according to income. Others propose eliminating it altogether. He said that it would be difficult to get traction without a common approach.
“Right now, there’s just too much to choose from,” Yesnowitz said.
“The first step is to try and find one approach that can move forward,” Yesnowitz said. “But even after that, there’s the question of when it can be brought to a vote because there are just not that many opportunities.”
“I don’t see a path forward right at the moment,” He also pointed out other pressing issues such as the debt negotiations. “But you never say never in these situations.”
There are more than 30 states that have a SALT cap.
In the meantime, more than 30 US states and local jurisdictions (including New York City) have A workaround was found. According to the following, owners of pass-through businesses such as partnerships and S-corporations, may be eligible for certain tax credits. Grant ThorntonThere are other possibilities for 2023.
According to the Federal Government, the workaround could result in $50 billion in lost revenue for the federal government by 2025. The biggest benefits will go to owners of pass-through businesses making $1 million or less. Research Daniel Hemel, New York University School of Law
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