As Congress continues to work on a new round of tax legislation, discussions remain ongoing regarding the future of the state and local tax (SALT) deduction cap. The House Ways and Means Committee has proposed raising the current $10,000 cap, enacted in 2017 under the Tax Cuts and Jobs Act, to $30,000, with income-based limitations.

Under the current draft proposal, individuals earning more than $200,000 and married couples earning more than $400,000 would see the expanded cap phased out. Supporters of the proposal suggest that it offers broader tax relief while maintaining constraints on high-income households.

Some lawmakers from states with higher tax burdens, including New York, New Jersey, and California, have advocated for a higher cap—up to $62,000 for individuals and $124,000 for couples—citing the impact of the current limits on their constituents. According to the Committee for a Responsible Federal Budget, increasing the cap to those levels could cost an estimated $900 billion over a 10-year period.

House Ways and Means Committee Chair Jason Smith has indicated that the proposed $30,000 cap represents a compromise among differing perspectives within the House majority. The House currently holds a narrow majority, requiring broad internal support for the bill to advance.

The SALT deduction cap has been a subject of debate since its implementation in 2017. Some analysts note that the cap affects taxpayers in higher-cost areas more significantly, while others highlight its role in limiting deductions for high-income earners.

Beyond the SALT provision, the broader tax legislation would make permanent the reduced individual tax rates introduced in 2017 and propose additional changes, including the elimination of federal income taxes on tips and overtime pay.

Deliberations around the SALT deduction and other provisions are expected to continue as lawmakers work toward finalizing the tax package before summer legislative deadlines.

Talley's team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

Negotiations are ongoing, with discussions expected to continue among lawmakers and House leadership. Meanwhile, pressure is mounting to finalize the package ahead of summer legislative deadlines.

Whether the current SALT compromise holds or a new version emerges, the outcome will carry significant implications for taxpayers in high-cost states and the broader debate over tax fairness.

Talley's team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.