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SALT Act
12/15/2023, 3:55 PM
Summary of Bill HR 1326
In 2017, the Tax Cuts and Jobs Act limited the SALT deduction to $10,000, which disproportionately affected residents in high-tax states such as California, New York, and New Jersey. The SALT Act seeks to alleviate this burden by allowing taxpayers to deduct the full amount of state and local taxes paid from their federal tax liability.
Supporters of the bill argue that the SALT deduction is essential for middle-class families and helps to prevent double taxation. They believe that reinstating the full deduction will provide much-needed relief to taxpayers in high-tax states. Opponents of the bill argue that the SALT deduction primarily benefits wealthier individuals and undermines the progressivity of the tax code. They also raise concerns about the potential loss of federal revenue if the deduction is reinstated. Overall, the SALT Act is a contentious issue that has sparked debate among lawmakers and taxpayers alike. Its fate remains uncertain as it continues to be deliberated in Congress.
Congressional Summary of HR 1326
Supporting Americans with Lower Taxes Act or the SALT Act
This bill modifies the cap on state and local tax deductions (the SALT deduction) and provides for Medicare coverage of hearing and vision services.
Current law caps the SALT deduction at $10,000 for single taxpayers and married couples filing jointly and $5,000 for married taxpayers filing separately; the cap applies to tax years 2018 through 2025.
The bill permanently (1) eliminates any cap for single taxpayers or married couples filing jointly who make less than $400,000 a year ($200,000 for married taxpayers filing separately); (2) increases the cap to $60,000 for single taxpayers or married couples filing jointly who make $400,000 or more a year ($30,000 for married taxpayers filing separately who make $200,000 or more a year); and (3) phases down the cap for filers who make more than $400,000 in a manner such that those who make $1 million or more do not qualify for the deduction.
The bill also provides for Medicare coverage of hearing and vision services, including hearing aids, glasses, and contact lenses, beginning in 2025. It also appropriates any amounts received as a result of the bill's changes to the SALT cap to Medicare's Supplementary Medical Insurance Trust Fund and provides for specific fund transfers for FY2024 and FY2025 to support Medicare hearing and vision coverage.
