H.R.246 - SALT Fairness for Working Families Act (119th Congress)
Summary
H.R. 246, the SALT Fairness for Working Families Act, proposes to amend the Internal Revenue Code of 1986 by increasing the limitation on the amount individuals can deduct for certain State and local taxes (SALT). The bill specifically aims to raise the deduction limit from $10,000 ($5,000 for married individuals filing separately) to $15,000 (twice that amount for joint returns). The amendment would apply to taxable years beginning after December 31, 2024.
Expected Effects
If enacted, this bill would allow individuals to deduct a larger portion of their state and local taxes, potentially reducing their federal tax liability. This change primarily benefits taxpayers in states with high state and local taxes. The increased deduction could also impact state and local government revenues and spending.
Potential Benefits
- Reduced Federal Tax Liability: Taxpayers in high-tax states could see a decrease in their federal tax burden.
- Increased Disposable Income: The increased deduction could lead to more disposable income for affected families.
- Potential Stimulus to Local Economies: Increased disposable income could lead to increased spending, benefiting local businesses.
- Fairness: Addresses concerns about the fairness of the current SALT deduction limit, particularly for middle-class families in high-tax states.
Most Benefited Areas:
Potential Disadvantages
- Increased Federal Deficit: Higher deductions could reduce federal tax revenue, potentially increasing the federal deficit.
- Disproportionate Benefit to Higher-Income Households: Even with the increase, the benefit may disproportionately favor higher-income households who pay more in state and local taxes.
- Complexity: Tax law changes can add complexity to tax preparation and compliance.
- Potential for State and Local Government Overspending: Increased deductions could reduce pressure on state and local governments to control spending and taxes.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the US Constitution. The uniformity clause might be invoked if the changes disproportionately affect specific states, although this is a complex legal question. The bill does not appear to infringe on any specific individual rights or liberties protected by the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).