House Democrats’ stimulus bill rolls back $10,000 SALT cap for 2 years

A new coronavirus relief bill has been proposed — and it will restore a big chunk of the state and local tax deduction for two years.

House Democrats released the text Tuesday for its latest proposed Covid-19 relief measures.

The $3 trillion Health and Economic Recovery Omnibus Emergency Solutions Act — or HEROES Act — calls for another round of economic stimulus payments to Americans, plus enhancements to the employee retention tax credit.

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Tucked away in the bill is a measure that will reinstate the so-called SALT itemized deduction for 2020 and 2021.

The Tax Cuts and Jobs Act, which went into effect in 2018, limited the amount of state and local tax deductions filers could claim on their tax returns to $10,000.

This write-off includes income taxes paid at the state and local level, so it hit taxpayers in high-tax states the hardest.

New Yorkers who itemized deductions in 2017 and claimed a SALT write-off took an average deduction of $23,804, according to the Tax Policy Center.

The new proposal doesn’t specify what’s supposed to happen after 2021.

Under the original language of the Tax Cuts and Jobs Act, the SALT cap is supposed to remain in place from 2018 to the end of 2025, when most of the individual provisions of the tax overhaul are set to expire.

Article source: https://www.cnbc.com/2020/05/12/house-democrats-stimulus-bill-rolls-back-10000-salt-cap-for-2-years.html