Bloomberg Intelligence Johnson Says Deal Reached on Raising SALT CAP TO $40,000
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May 21, 2025 Garrett Watson, Director of Policy Analysis at the Tax Foundation, breaks down the recent agreement to increase the state and local tax deduction to $40,000, highlighting its potential impact on different regions. Karen Manna, an Investment Director at Federated Hermes, shares her insights on market trends, noting a rebound in tech stocks while cautioning about fiscal uncertainties affecting bonds and the dollar. Together, they shed light on how evolving tax policies are shaping investment landscapes.
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SALT Cap Raising Debate
- Republicans in the House have nearly agreed to raise the SALT deduction cap to $40,000 but with income limits around $500,000.
- The bill also partially limits using pass-through businesses to work around current SALT caps, affecting some business incomes.
Temporary New Deductions Included
- The economic bill includes temporary new deductions, such as for tipped income and a $4,000 deduction for seniors.
- These expire after four years, implying potential future tax debates on their extension and cost.
Energy Credit Phase-Out Debate
- The phase-out of Inflation Reduction Act energy credits may be accelerated from early 2030s to 2027.
- Senate might propose different, less aggressive IRA credits, affecting overall revenue and tax policy.