State and Local Tax Cap May Be Here To Stay for the Highest Earners in High Tax States

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  • Sen. Bernie Sanders’ $6 trillion budget included $120 billion for state and local tax relief over five years.
  • The provision boosted hopes in high tax states that the $10,000 cap on state and local tax deductions would be lifted. However, such a measure would be more expensive than what is being discussed.
  • The measure more likely would establish an income threshold of $400,000 a year, with those earning less than that amount being exempt from the SALT cap.
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High earners in high tax states cheered the news last week that Sen. Bernie Sanders included relief from the state and local tax cap in his budget.

But the numbers suggest Sanders is only considering a partial reduction in the cap. And the latest proposal being discussed in Congress would do little to help the top earners who account for the largest share of SALT deductions.

Sanders’ $6 trillion budget included $120 billion for SALT relief over five years. The provision boosted hopes in states like New York, New Jersey and California that the progressive wing of the Democratic party is open to eliminating the $10,000 cap on state and local tax deductions. The cap was part of the 2017 Tax Cuts and Jobs Act and created an effective tax hike for many high-earners in high-tax states.

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www.cnbc.com/2021/06/28/state-and-local-tax-cap-may-be-here-to-stay-for-the-highest-earners.html

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