While eliminating salt may impact your health, eliminating SALT may impact your wallet.
The state and local tax (SALT) deduction is a federal tax benefit. If taxpayers itemize their deductions on federal income tax returns, they can deduct their state and local property taxes, and either their general sales taxes or income taxes. Under the SALT deduction, taxpayers can avoid double-taxation on the same income.
Higher-income households are more likely to claim a SALT deduction, and will likely feel the largest impact of eliminating the deduction. Only about 30 percent of taxpayers across all income levels and states typically claim a SALT deduction, but nevertheless those people will be adversely affected as well. According to a report by the Government Finance Officers Association, over 100 million Americans were impacted by a SALT deduction in 2015. Over 75 percent of those people have an income over $100,000. States with a larger number of high-income residents are also affected by the SALT deduction.
While not 100% certain right now (maybe in a few days), the SALT deduction is probably going away or will be limited. The Senate bill seeks to eliminate the SALT deduction completely. The House bill seeks to cap the deduction for property taxes at $10,000 and completely eliminate the income and sales tax deduction. After conference we shall see what happens. One looming question about all of this: is reducing or eliminating the SALT deduction even constitutional? Some think there may be a problem.
For almost 20 years Kim Lowe has lawyered from the trenches. Kim lawyers from experience, using her knowledge of the law and understanding of how both for-profit and nonprofit business enterprises operate.
Emilee Walters is our first Avisen Legal Fellow alum and a third year law student at St. Thomas School of Law. Emilee is exploring a legal career in business law.