There’s a new bill in Washington that’s become the subject of some ugly debate. In a surprising twist, the fate of the current House Republican tax package might hinge on a proposal to raise the State and Local Tax (SALT) deduction cap.
Under current law, homeowners can deduct up to $10,000 in combined state income and property taxes on their federal return—a limit set by the 2017 Tax Cuts and Jobs Act. But that cap is set to expire, and a bloc of House Republicans from high-tax states like New York, New Jersey, and California are threatening to derail the package unless the SALT cap is raised or scrapped entirely.
The first version of the bill was voted down today, as hardline Republicans called for greater spending cuts and others insisted on increased SALT deductions. The current proposal would raise the deduction limit from $10,000 to $30,000, but some lawmakers are making the case that number still falls short of providing meaningful relief for their constituents. If the measure passes, however, here are the areas that can benefit the most.
Why New York is fighting so hard to raise the cap
Few states have more riding on the future of the SALT deduction than New York. With some of the highest property taxes in the country and a high-income tax rate layered on top, New York residents are disproportionately affected by the current $10,000 cap on state and local tax deductions…