The Biden administration recently downplayed the expansion of the SALT deduction limit.
Residents in high-tax states such as California are seeking an expansion of the $10,000 SALT deduction limit that was signed into law by then-President Donald Trump as part of the 2017 Tax Cuts and Jobs Act.
Biden Administration Downplays Issue
President Biden has been clear that he does not believe the wealthiest Americans need another tax break. White House National Economic Council Director Lael Brainard has indicated that this principle would guide the President and his team’s approach to the SALT deduction.
According to Brainard, a second Biden administration would focus on increasing taxes for corporations and billionaires. Brainard said the concept of tax fairness resonates strongly with people. “They do not understand why someone with hundreds of millions of dollars in income pays a tiny share of their actual income compared to a schoolteacher or a firefighter.”
The Biden administration’s position on tax fairness implies tax cuts for the wealthy may be allowed to expire. If all the 2017 tax cuts expire, most U.S. households would see their tax liabilities increase. However, President Biden vows that households earning $400,000 or less will not pay a penny more in new taxes.
The Congressional Budget Office estimates that if all tax cuts are extended, the national debt will increase by $4.6 trillion over the next decade, including debt service costs.
The Hill reports that Republicans are preparing to fast-track the extension of the Trump tax cuts if they win control of Congress in November. Reconciliation permits lawmakers to pass major spending and tax bills with a simple majority vote. Trump’s allies have urged him to lower the SALT deduction to offset other tax cuts.
In addition to the $10,000 SALT cap, individual tax rate reductions, a tax break for privately owned businesses, and a reduction in inheritance taxes are also set to expire.
Prepare for Taxes Changes with Confidence
The tax professionals at Windes can help you assess how the SALT deduction works, SALT cap workarounds, and how potential cap adjustments will affect your overall tax planning and financial goals.
Contact us today to discuss your tax needs and discover how our knowledgeable professionals can help you meet your financial goals.