Tax Notes Talk
The SALT Cap After 2025
Jul 12, 2024
Ted Peterson, Professor at the University of North Texas Ryan College of Business, discusses the SALT deduction cap and its potential paths forward post-2025. Topics include the origins and impacts of the cap, alternatives to the policy, and various tax-related articles in Tax Notes magazines.
18:31
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Quick takeaways
- The SALT deduction cap impacts high-income taxpayers in high-tax states, sparking debates on fairness and party alignments.
- The future of the SALT deduction post-2025 involves discussions on lifting the cap entirely or adjusting it based on income levels.
Deep dives
History and Importance of State and Local Tax Deduction
The state and local tax (SALT) deduction has been part of the tax code since 1913, allowing taxpayers to deduct property, sales, or income taxes paid to state and local governments. This deduction is based on the rationale that these taxes are unavoidable obligations. Despite changes made by the Tax Cuts and Jobs Act in 2017, the SALT deduction is crucial for itemizing taxpayers, with limitations impacting high-income earners.
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