Efforts to Restore SALT Deduction Begin
While the Tax Cuts and Jobs Act of 2017 reduced Federal income taxes for most taxpayers, it did increase the tax burden on many high income taxpayers living in high tax states by limiting or eliminating the itemized deduction for state and local taxes (SALT). At the time, legislators from high tax states such as Illinois, New York, New Jersey, Connecticut, and California complained vociferously that the Federal government would no longer be subsidizing state and local taxes.
Long on the agenda of Democrats, two New Jersey House members have started an effort to restore the SALT deductions as part of the proposed supplemental virus relief package. Whether restoration of the SALT deduction can secure necessary bipartisan support standing on its own is unclear. The attempt to include this tax relief for high income taxpayers in the proposed additional virus relief package could adversely affect the ability of the relief package to obtain the bipartisan support it needs.
More will be provided as additional information from Washington becomes available.