SALT deduction

Lawmakers are re-introducing legislation to repeal the deduction cap on state and local taxes

Sen. Susan Collins introduced the SALT Deduction Fairness Act last week, the latest effort to restore a full income tax deduction for state and local taxes.

The bill, introduced in the House by Rep. George Santos, R-NY, is one of three currently circling around Congress that would lift the state and local tax deduction.

The issue is important to lawmakers in high-tax states, and is also important to municipal issuers in those places who have said the cap infringes on their fiancial sovereignty.

The "no SALT no deal" Democrats appear ready to support the compromise reconciliation package negotiated in the Senate.

The bill from Chuck Grassley and other Senate Republicans would extend the $10,000 cap on the state and local tax deduction for federal income tax filers.

Sponsors of the Supporting American with Lower Taxes Act see it as a potential compromise on the contentious state and local tax deduction cap issue.

Democrat-leaning states argue that the $10,000 SALT cap deduction is politically motivated and violates the U.S. Constitution.

President Joe Biden's $1.7 trillion bill passed the House after months of debate and without any of the municipal bond market's priorities.

The Build Back Better reconciliation bill would raise the SALT cap to $80,000 from $10,000, and that impact varies widely from state to state.