Americans Could Receive Bigger Tax Refunds

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( – A potential modification to the cap on state and local tax (SALT) deductions, a measure from the Trump administration, could lead to larger tax refunds for numerous Americans this year. The current SALT deduction limit, set to expire in 2026, restricts the deductible amount of state and local taxes on federal tax returns to $10,000, a change introduced by Trump’s Tax Cuts and Jobs Act.

A proposed adjustment seeks to elevate this cap to $20,000 for married couples filing jointly with incomes up to $500,000, but this change would only apply to the 2023 tax year before reverting back to the original limit. This amendment aims to alleviate the burden on middle-class homeowners in areas with high property taxes, who have been vocal about the deduction cap’s unfairness, especially since it doesn’t distinguish between single and joint filers, effectively penalizing married couples.

The House of Representatives is reviewing this proposal, known as the SALT Marriage Penalty Elimination Tax, with a vote anticipated soon. If approved, the bill will advance to the Senate. Introduced by Representative Mike Lawler from New York, the bill is championed as a measure to rectify an injustice, promoting fairness and family support.

As the tax filing season commenced on January 29, the enactment of this bill would necessitate adjustments to already filed tax returns by taxpayers or the IRS, with the standard deadline for tax submissions or extension requests set for April 15.

However, an analysis by the Committee for a Responsible Federal Budget reveals that this temporary SALT cap increase would cost approximately $11.7 billion for one year, predominantly benefiting individuals earning over $200,000. The Tax Foundation’s senior policy analyst, Garrett Watson, highlighted that the proposed change would offer minimal advantage to those earning under $100,000, with the majority of benefits accruing to higher-income earners. Watson critiqued the bill for potentially enlarging the budget deficit and introducing a new complication in the tax code without fostering long-term economic growth.

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