House Dems: SALT Cap Increase Vote Likely Before Year’s End

While I normally do not include “proposed” legislation in this column I wanted to make you aware of some chatter in the press (in case your clients bring this to your attention). The House of Representatives has been looking at a bill to increase the state and local tax limits, however, it is considered highly unlikely to pass the Senate. The information is as follows:

A House vote to increase the $10,000 cap on the state and local tax (SALT) federal deduction is likely before year’s end, according to House Democrats.

SALT Cap Bill Could Surface in Coming Days

Although not yet released, a bill to temporarily increase the SALT cap under Republicans’ Tax Cuts and Jobs Act (TCJA) could surface in the coming days, House Democratic tax writers alluded on December 4. Lawmakers spoke with reporters after exiting a member’s meeting, indicating that a House Ways and Means Committee markup of the bill could reportedly come as early as next week.

House Democrats’ SALT cap bill is expected to:

• temporarily increase the SALT cap to an undetermined figure (lawmakers estimate between $15,000 and $30,000), and
• fast-track the increase of the top marginal tax rate for individuals back to 39.6 percent, currently scheduled for 2026 under the TCJA.

Ways and Means Chair Richard Neal, D-Mass., told reporters that he "wants" a House vote on the measure before the end of the year. Notably, the House is scheduled to adjourn on December 20, and Congress has yet to reach an agreement for fiscal year 2020 appropriations. Government funding under the current stop gap spending bill keeping the government open is set to expire on December 21.

The nonpartisan Joint Committee on Taxation (JCT) has estimated that in 2019 over 40 percent of the tax benefit received from repealing the SALT cap would go to households making over $1 million. Similarly, the widely considered left-leaning Tax Policy Center (TPC) has estimated that over 50 percent of the benefit received from repealing the SALT cap would go the top 1 percent of households.

Additionally, lawmakers continue bipartisan discussions on tax extenders and TCJA technical corrections, which are expected to be attached to a year-end appropriations package. While those measures are expected to receive some bipartisan support, any bill to scale back or repeal the TCJA’s SALT cap is likely to be DOA in the Republican-controlled Senate.