The bill could have a significant impact on state tax laws by modifying how married individuals can deduct state and local taxes from their taxable income. If enacted, it is likely to provide financial relief to many married couples who itemize their deductions and live in states with higher tax rates. This modification could encourage married couples to file jointly without the fear of incurring higher tax liabilities due to structural limitations inherent in the SALT deduction. The proposal is designed to rectify what proponents deem an inequitable tax structure, ultimately enhancing fairness in the tax system for married couples.
Summary
House Bill 7160, known as the SALT Marriage Penalty Elimination Act, seeks to amend the Internal Revenue Code of 1986 by adjusting the limitation on State and Local Tax (SALT) deductions for certain married individuals. Specifically, it aims to increase the SALT deduction cap for married couples filing jointly from $10,000 to $20,000, but only if their adjusted gross income is below $500,000. The proposed change is intended to alleviate the tax burden faced by high-income married couples who previously experienced a discrepancy in tax benefits compared to single filers, which has been informally described as a 'marriage penalty.'
Contention
Despite the intended benefits, the SALT Marriage Penalty Elimination Act has generated debate among lawmakers. Supporters argue that this adjustment is a necessary step to prevent unfair taxation of married couples, while opponents might view it as an expensive measure that could reduce state tax revenues and disproportionately benefit higher-income households. Concerns have also been raised regarding the overall implications of expanding tax deductions at a time when many states may be facing budget constraints, raising the question of whether the benefits outweigh the potential fiscal downsides.
Related
Providing for consideration of the bill (H.R. 7160) to amend the Internal Revenue Code of 1986 to modify the limitation on the amount certain married individuals can deduct for State and local taxes, and providing for consideration of the resolution (H.Res. 987) denouncing the harmful, anti-American energy policies of the Biden administration, and for other purposes.
SALT Marriage Penalty Elimination Act This bill increases from $10,000 to $20,000 the amount that a married couple filing a joint tax return may deduct as state and local taxes (thus eliminating the tax effect known as the marriage penalty with respect to the deduction).
Providing for consideration of the bill (H.R. 7160) to amend the Internal Revenue Code of 1986 to modify the limitation on the amount certain married individuals can deduct for State and local taxes, and providing for consideration of the resolution (H.Res. 987) denouncing the harmful, anti-American energy policies of the Biden administration, and for other purposes.
SALT Fairness for Working Families ActThis bill increases the limitation on the federal tax deduction for state and local taxes (commonly known as the SALT deduction cap) to $15,000 ($30,000 for married individuals filing a joint federal income tax return). Under current law, the SALT deduction cap is $10,000 ($5,000 for a married individuals filing separate federal income tax returns).