Bill Summary
The "SALT Fairness and Marriage Penalty Elimination Act" proposes amendments to the Internal Revenue Code regarding the deduction limits for certain state and local taxes (SALT) that individuals can claim on their federal tax returns. Currently, individuals can deduct a maximum of $10,000 ($5,000 for married individuals filing separately) for these taxes. This bill seeks to significantly increase these limits to $100,000 for individual filers and $200,000 for those filing jointly. The changes would apply to taxable years starting after December 31, 2024, aiming to provide greater tax relief to individuals and couples, particularly in high-tax states.
Possible Impacts
The proposed legislation, known as the "SALT Fairness and Marriage Penalty Elimination Act," modifies the limitations on state and local tax (SALT) deductions for individuals. Here are three examples of how this legislation could affect people:
1. **Increased Tax Deductions for High-Income Earners**: The new limits of up to $100,000 for individual filers and $200,000 for married couples filing jointly would allow high-income earners, especially those living in states with high taxes (like California or New York), to deduct a significantly larger amount of their state and local taxes from their federal taxable income. This could result in lower overall tax liabilities for these individuals, providing them with increased disposable income.
2. **Benefit to Married Couples**: By eliminating the marriage penalty associated with the SALT deduction, the legislation benefits married couples who previously faced lower deduction limits. Couples filing jointly would see a substantial increase in their deductible amount, potentially saving them thousands of dollars in taxes compared to the previous limits. This could encourage marriage and financial planning strategies that favor joint filings.
3. **Impact on State and Local Government Revenues**: With the increased deductions available under this act, state and local governments may need to consider their revenue strategies. Higher deductions could result in reduced federal tax revenues, potentially impacting federal funding for state and local programs. Conversely, if taxpayers see a financial benefit from these deductions, it could lead to increased compliance and collections of state and local taxes, potentially stabilizing or increasing revenue in certain jurisdictions.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 232 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 232
To amend the Internal Revenue Code of 1986 to modify the limitation on
the amount individuals can deduct for certain State and local taxes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 7, 2025
Mr. Lawler introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify the limitation on
the amount individuals can deduct for certain State and local taxes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``SALT Fairness and Marriage Penalty
Elimination Act''.
SEC. 2. MODIFICATION OF LIMITATION ON DEDUCTION FOR CERTAIN STATE AND
LOCAL TAXES OF INDIVIDUALS.
(a) In General.--Section 164(b)(6)(B) of the Internal Revenue Code
of 1986 is amended by striking ``shall not exceed $10,000 ($5,000 in
the case of a married individual filing a separate return).'' and
inserting ``shall not exceed--
``(i) except as provided in clause (ii),
$100,000, and
``(ii) in the case of a joint return,
$200,000.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2024.
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