Though it has little chance of becoming law during this Congress, the issue of repealing the cap on state and local tax (SALT) will be the subject of a hearing by the House Committee on Ways and Means tomorrow. The Hill has a preview.
The Tax Cuts and Jobs Act capped the once unlimited deduction at $10,000, which impacts a lot of taxpayers in New Jersey and other high tax states. New Jersey tried to get around the cap by creating local charities in lieu of property taxes, but new IRS rules prevented that.
Before the hearings begin, the Joint Committee on Taxation (JCT) added a new twist to the debate, issuing a report on Monday saying restoring the SALT deduction would benefit mostly wealthy taxpayers.
“Repeal of the GOP tax law’s cap on the state and local tax (SALT) deduction would almost exclusively benefit those with incomes of at least $100,000, and much of the benefit would go to those with incomes of at least $1 million,” The Hill writer Naomi Jagoda explained, citing the JCT report.
In total, eliminating the SALT deduction cap would reduce tax liability by $77.4 billion in 2019, and $40.4 billion of the tax cut would go to taxpayers with incomes of at least $1 million, according to JCT.