As Republicans move closer to passing their $4 trillion tax bill, one provision is proving to be an outsize obstacle: The state and local tax deduction known as SALT. The deduction allows those who itemize when filing their federal taxes to deduct property, sales, or income taxes already paid to state and local governments. It was capped at $10,000 for both individuals and married couples under Trump’s 2017 tax bill, much to the chagrin of Republican politicians in pricey enclaves of liberal states like New Jersey, New York, and California where taxes are high.
Still, financial advisors say that even doubling the cap for married couples, like many other tax deductions, would be welcome to eliminate the so-called marriage penalty.
“With a cap at $10,000 for total state income and real estate taxes combined, many middle-class families find that they can only deduct a relatively small portion of these expenses,” says Frost.
