Last month, we reported that the House version of the “One Big, Beautiful Bill” included a $30,000 increase to the cap on the deduction for state and local taxes (SALT) for individual taxpayers ($10,000 – $40,000). The $40,000 deduction is subject to a phaseout but cannot be less than $10,000. House GOP lawmakers fought hard for even higher state tax deductibility but settled for the $40,000. Those same GOP lawmakers may be disappointed by the version currently taking shape in the Senate.
On Monday, June 16th, the Senate released the first draft language of the tax provisions in its version of the “One Big, Beautiful Bill.” Though the Senate version of the bill intentionally mirrors many of the House provisions, there was one notable departure: the Senate version includes NO increase to the SALT deduction cap. The Senate’s current draft of the bill maintains the $10,000 SALT deduction cap.
It is worth noting that the Senate identified the $10,000 SALT deduction cap as a “placeholder” and expects further negotiations on this amount. While several GOP Senators support lowering the House’s proposed $40,000 SALT cap, many GOP Representatives have warned they’ll oppose the bill if the cap is reduced. This politically sensitive issue is far from resolved.
As always, we will continue to monitor progress on the legislation and keep you informed of important updates. Should you have any questions or concerns, please contact your WG tax advisors for more information.
