# Understanding the SALT Fairness and Deficit Reduction Act

Right now, when you file your federal taxes, there's a limit on how much you can deduct for state and local taxes you've paid. That limit is currently $10,000 per person (or $5,000 if you're married filing separately). This bill would dramatically increase that cap to $60,000 for individual filers and $120,000 for couples filing jointly, and it would extend this higher limit through 2032 instead of letting it expire in 2026.

Here's what this means in practical terms: If you live in a state with high income taxes or property taxes—places like New York, California, New Jersey, or Massachusetts—you're currently hitting that $10,000 cap pretty easily. A homeowner paying $8,000 in property taxes plus $5,000 in state income taxes is already maxed out. Under this bill, that same person could deduct the full $13,000 they paid. The benefit would be biggest for higher-income earners in high-tax states, since they tend to pay more in state and local taxes overall. The bill also includes an inflation adjustment starting in 2024, so the $60,000 limit would gradually increase each year to keep pace with rising costs.

The trade-off here involves federal revenue. By allowing people to deduct more state and local taxes, the federal government collects less in income taxes. The bill's supporters argue this is fair to people in high-tax states who feel they're being penalized twice, while critics worry it primarily benefits wealthy households and reduces money available for federal programs or increases the deficit.

SALT Fairness and Deficit Reduction Act

LaLota, Nick

SALT Fairness and Deficit Reduction Act This bill increases the limitation on the tax deduction for state and local taxes to $60,000 (the limit is currently $10,000 for individual taxpayers). The bill also requires an annual inflation adjustment to the increased amount beginning after 2023, and extends through 2032 the period during which the limitation is in effect.