SALT
Sweeping Federal Tax and Spending Changes Threaten Local Governments
June 3, 2025 • By Kamolika Das
Given this environment, local leaders must do what they can to preserve and strengthen progressive revenue tools, advocate for expanded local taxing authorities and flexibility, and push their state leaders to decouple from harmful federal tax changes.
Five Issues for States to Watch in the Federal Tax Debate
June 3, 2025 • By Dylan Grundman O'Neill, Kamolika Das, Marco Guzman, Miles Trinidad, Neva Butkus
This post covers five particularly notable provisions for states: increasing deductions for state and local taxes (SALT) paid, allowing more generous tax write-offs for businesses, offering new avenues for capital gains tax avoidance to people contributing to private school voucher funds, carving tips and overtime out of the tax base, and re-upping Opportunity Zone tax breaks for wealthy investors.
States Should Chart Their Own Course on SALT Deductions
May 21, 2025 • By ITEP Staff
While a federal SALT cap is hotly debated, capping deductibility at $10,000 was an unambiguously good idea at the state level. States would be smart to stick with the current cap or, better yet, go even farther and repeal SALT deductions outright. Going along with a higher federal SALT cap would double down on a regressive tax cut that will mostly benefit a small number of relatively wealthy state residents and cost states significant revenue.
Different Approaches to the Trump Tax Law’s Cap on Deductions for State and Local Taxes (SALT)
January 17, 2025 • By Steve Wamhoff
President Trump and the Republican majorities in the House and Senate may not extend the $10,000 cap on federal income tax deductions for state and local taxes (SALT), the one part of the 2017 law that significantly limits tax breaks for the rich. And, depending on which proposal they settle on, leaving out the existing cap on SALT deductions could add between $10 billion and over $100 billion each year to the total cost of their tax plan.
Trump’s Plan to Extend His 2017 Tax Provisions: Updated National and State-by-State Estimates
January 8, 2025 • By Steve Wamhoff
Trump’s plan to make most of the temporary provisions of his 2017 tax law permanent would disproportionately benefit the richest Americans. This includes all major provisions except the $10,000 cap on deductions for state and local taxes (SALT) paid.
House SALT Proposal is Expensive, Unneeded, and Poorly Designed
February 2, 2024 • By Joe Hughes
The SALT Marriage Penalty Elimination Act passed by the House Rules Committee on February 1 is costly, decreasing tax revenue by about $8 billion in 2023. It also mostly only helps taxpayers who are already well off.
Weakening the SALT Cap Would Make House Tax Package More Expensive and More Tilted in Favor of the Wealthiest
August 7, 2023 • By Steve Wamhoff
The three tax bills that cleared the House Ways and Means Committee in June are reportedly stalled due to some House Republicans’ demands that the package include provisions weakening the $10,000 cap on deductions for state and local taxes (SALT). Modifying the House tax package in this way would make it much more expensive while benefiting the richest fifth of taxpayers almost exclusively.
Latest Proposal from Senate Democrats Would Bar the Rich from SALT Cap Relief
December 7, 2021 • By Steve Wamhoff
Richest taxpayers would receive $0 benefit under new compromise compared with 51 percent of the benefit of House-passed SALT provision DOWNLOAD NATIONAL AND STATE-BY-STATE ESTIMATES In the latest chapter of the saga over SALT, some Senate Democrats are discussing a new compromise that would amend the House-passed provision providing relief from the SALT cap to […]
Senators Menendez and Sanders Show the Way Forward on the SALT Cap
November 3, 2021 • By Steve Wamhoff
Amending the Build Back Better bill to fully repeal the SALT cap would mean that the richest 1 percent could pay less in personal income taxes than they do now, which goes against everything President Biden has said for the past year as he promoted this legislation.
Repealing the SALT Cap Would Wipe Out Revenue Raised by the House Ways and Means Bill’s Income Tax Provisions
September 23, 2021 • By Steve Wamhoff
There are several ways that the House leadership could avoid this problem. One approach is for lawmakers to replace the SALT cap with a different kind of limit on tax breaks for the rich that actually raises revenue and avoids disfavoring some states compared to others as the SALT cap does. ITEP has suggested a way to do this.
Frequently Asked Questions about Proposals to Repeal the Cap on Federal Tax Deductions for State and Local Taxes (SALT)
September 3, 2021 • By .ITEP Staff, Carl Davis, Steve Wamhoff
Even though Democrats in Congress uniformly opposed the TCJA because its benefits went predominately to the rich, many Democratic lawmakers now want to give a tax cut to the rich by repealing the cap on SALT deductions.
Millionaire Sounds Off on Calls to Lift SALT Deduction Cap
August 27, 2021 • By Reggie Rucker
We asked New York state resident Morris Pearl, former Blackrock executive and current chair of the Patriotic Millionaires, a few questions to hear straight from the mouth of a millionaire how the SALT cap and its proposed repeal would affect his life.
New Report from ITEP Describes Options for Changing the SALT Cap without Repealing It
August 26, 2021 • By Steve Wamhoff
A new report from ITEP provides policy recommendations to modify the $10,000 cap on federal tax deductions for state and local taxes (SALT), which was signed into law by President Trump as part of the Tax Cuts and Jobs Act. Because the SALT cap mostly restricts tax deductions for the richest 5 percent of Americans, the best options are to leave the cap as is or replace […]
SALT Cap Repeal Would Exacerbate Racial Inequities
April 20, 2021 • By Carl Davis
A new ITEP analysis provides critical data for the debate over whether to repeal the $10,000 cap on state and local tax (SALT) deductions. The report finds that repeal of the SALT cap without other reforms would worsen economic disparities and exacerbate racial inequities baked into the federal tax system.
SALT Cap Repeal Would Worsen Racial Income and Wealth Divides
April 20, 2021 • By .ITEP Staff, Carl Davis, Jessica Schieder
A bipartisan group of 32 House lawmakers banded together to form the “SALT Caucus,” demanding elimination of the SALT cap. None of their arguments in favor of repeal change the fact that it would primarily benefit the rich and, according to new research, exacerbate racial income and wealth disparities.
Not Worth Its SALT: Tax Cut Proposal Overwhelmingly Benefits Wealthy, White Households
April 20, 2021 • By .ITEP Staff, Carl Davis, Jessica Schieder
A previous ITEP analysis showed the lopsided distribution of SALT cap repeal by income level. The vast majority of families would not benefit financially from repeal and most of the tax cuts would flow to families with incomes above $200,000. This report builds on that work by using a mix of tax return and survey data within our microsimulation tax model to estimate the distribution of SALT cap repeal across race and ethnicity. It shows that repealing the SALT cap would be the latest in a long string of inequitable policies that have conspired to create the vast racial income…
What to Expect from Biden and Congressional Democrats on Tax Increases for Individuals
April 8, 2021 • By Steve Wamhoff
The Biden administration has already provided details on its corporate tax proposals and in the next couple of weeks is expected to propose tax changes for individuals. Meanwhile, congressional Democrats have some ideas of their own. What should we expect?
A Proposal to Simplify President Biden’s Campaign Plan for Personal Income Taxes and Replace the Cap on SALT Deductions
April 8, 2021 • By Steve Wamhoff
In this paper, we describe a tax policy idea that would simplify the proposals President Biden presented during his campaign to raise personal income taxes for those with annual incomes greater than $400,000. Our proposal would replace the cap on state and local tax (SALT) deductions with a broader limit on tax breaks for the rich that would raise more revenue than the personal income tax hikes that Biden proposed during his campaign. Our proposal would also achieve Biden’s goals of setting the top rate at 39.6 percent and raising taxes only on those with income exceeding $400,000.
Dems, Don’t Repeal the SALT Cap. Do This Instead.
February 1, 2021 • By Steve Wamhoff
Ever since it was enacted as part of the Trump-GOP tax law, some Democrats in Congress have been pushing to repeal the cap on federal tax deductions for state and local taxes (SALT). Recently several Democratic members have suggested that repeal of the cap should be part of COVID relief legislation. While the cap on SALT deductions is problematic, repealing it without making other reforms would result in larger tax breaks for the rich. Instead, lawmakers should consider ITEP’s proposal to replace the SALT cap with a broader limit on tax breaks for the rich that would accomplish Biden’s goal…
Millionaire Population Swells in Blue States Despite Migration Fearmongering
September 3, 2020 • By Carl Davis
Although the 2017 Tax Cuts and Jobs Act has created a slew of problems, it is now clear that a mass migration of top earners out of higher-tax blue states is not one of them.
IRS Rule Leaves the Door Open for Private/Religious School Voucher Donation Schemes, Broader SALT Cap Workarounds
August 12, 2020 • By Carl Davis
An IRS regulation released last Friday sanctions a widely derided tax dodge that allows profitable businesses to avoid taxes by sending money to private and religious school voucher funds. It also leaves the door open to a brand of state and local tax (SALT) cap workaround that previously appeared to be on its way out.
Addressing the COVID-19 Economic Crisis: Advice for the Next Round
April 7, 2020 • By Steve Wamhoff
Americans need many things right now beyond tax cuts or cash payments. But for people whose incomes have declined or evaporated, money is the obvious, immediate need to prevent missed rent or mortgage payments, skipped hospital visits and other cascading catastrophes. So, what should Congress do next to get money to those who need it?
House Democrats’ Suggestion of Retroactively Repealing SALT Cap is a Poor Emergency Relief Measure
March 31, 2020 • By Steve Wamhoff
The House Democrats have plenty of ideas to help workers and families and boost the economy, but Speaker Nancy Pelosi’s recent idea to repeal the cap on deductions for state and local taxes (SALT) is not one of them. The 2017 Trump-GOP tax law includes many provisions that should be repealed. Unfortunately, Congressional Democrats have long made it clear that they want to start by repealing the $10,000 cap on SALT deductions, which is one of the law's few provisions that restrict tax breaks for the rich.
ITEP Urges IRS to End SALT Workaround Scheme for Businesses
January 29, 2020 • By Carl Davis
A new IRS proposal could once again allow wealthy business owners to use state charitable tax credits–including tax credits for donating to support private and religious K-12 schools–to dodge the federal government’s $10,000 cap on state and local tax (SALT) deductions.
ITEP Comments and Recommendations on REG-107431-19
January 29, 2020 • By Carl Davis
Comments regarding the possibility that owners of passthrough businesses may be able to circumvent the $10,000 SALT deduction cap of section 164(b)(6) by recharacterizing the nondeductible portion of their state and local income tax payments as deductible expenses associated with carrying on a trade or business.
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