Tax Reform

Federal Legislation Would Prevent SALT From Penalizing Married Taxpayers

Federal Legislation Would Prevent SALT From Penalizing Married Taxpayers

New federal legislation would prevent SALT deductions from penalizing married taxpayers in the United States. 

The bill, which was introduced by U.S. Senator Susan Collins (R-ME), is known as the SALT Deduction Fairness Act. In an official release about her proposal, Collins stated, “Americans [sic] families have begun calculating their taxes and filling out returns. We should not create a situation where married couples would have been better off financially were they not married."

She continued, "The SALT Deduction Fairness Act would ensure that limits on SALT deductions do not disproportionately and unfairly penalize married filers by simply doubling the deduction to $20,000 for married filers.”

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As it stands now, both single and married filers are capped at a $10,000 state and local taxed deduction on their federal income tax returns. This means that single filers and married filers follow identical guidelines. Married people who file taxes separately are limited to $5,000 each. In essence, these taxpayers would be better off not getting married at all in regard to the SALT deduction.

Collins's legislation would eliminate this "marriage penalty" by increasing the deduction to $20,000 for married couples. 

In addition, a similar bipartisan bill has been introduced in the United States House of Representatives. U.S. Representative Andrew R. Garbarino (R-NY-02) announced his bill, H.R. 2555, The Securing Access to Lower Taxes by Ensuring (SALT) Deductibility Act

This proposed legislation would allow taxpayers to fully deduct their state and local taxes on federal income returns -- in other words, it would entirely remove the existing cap. Garbarino's co-leads on this legislation are Representatives Josh Gottheimer (D-NJ-05), Young Kim (R-CA-40), Anna Eshoo (D-CA-16), Chris Smith (R-NJ-04), Brad Schneider (D-IL-10), Mike Lawler (R-NY-17), and Rob Menendez (D-NJ-08).

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In an official release regarding this bill, Garbarino said, "The SALT deduction cap has devastated my community by placing an unfair financial burden on Long Islanders and on taxpayers across the country."

He added, "Long Islanders pay some of the highest property taxes in the country and, for the hardworking middle-class families in my district, the $10,000 cap means they are only able to deduct a fraction of what they pay from their federal income taxes. I am talking about police officers, firefighters, nurses, teachers, and small businesses owners who are being double taxed on money that was never available to them."

"The cap on SALT deductions has hurt Illinois families and local communities. Forcing Americans to pay federal tax on taxes they already paid to state and local governments is double taxation and it's wrong. In my Illinois district, approximately 42 percent of filers use the SALT deduction, and the average deduction is significantly higher – nearly double - the new cap. The SALT cap is not fair to America's middle class, and I'm proud to be leading the way with this bipartisan legislation," Schneider weighed in. 

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Credit: Getty Images

It is not yet known when either of these federal bills will be presented on the floor of Congress.

What do you think about removing or altering the current SALT cap?

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Rebekah Barton

Rebekah Barton

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