Stock Groups

SALT reprieve still possible as Democrats hone spending bill


Rep. Josh Gottheimer (D-N.J.) speaks at a press conference held with the Problem Solvers Caucus Dec. 3, 2020.

Getty Images| Bloomberg | Getty Images

While Democrats work out their $1.75 Trillion social and climate spending plan, it is possible that the plan will still provide relief for $10,000 federal deductibility for local and state taxes. This is known as SALT.

This limit is a problem for states with high taxes, like New York, New Jersey, and California. It prevents Americans who itemize deductions, from writing off over $10,000 in property or state income taxes on federal returns. 

Although President Joe Biden didn’t include the measure in his framework, House Democrats came closer on Tuesday to an agreement regarding SALT relief.

Learn more about Personal Finance
Here’s how Biden’s Build Back Better framework would tax the rich
Paid-leave advocates slam exclusion of policy from social spending bill
E
nhanced child tax credit will continue for 1 more year, per Democrat plan

A plan that could include a 5-year repeal between 2021 and 2025, with reinstatement starting in 2026 or 2031 is one option. A third plan includes a three year repeal, with a lower cap for 2025. Nevertheless, negotiations continue so proposals could change.

Although details remain to be finalized, some House Democrats are optimistic about current progress.

In a joint statement, Reps. Josh Gottheimer (D-N.J.), Tom Suozzi (D-N.Y.) and Mikie Sherrill (D-N.J.) stated that “Today’s news is encouraging for us to repeal the SALT cap.”

They stated that they would continue working with Senate and House leaderships to repeal the SALT cap. “No SALT, no deal.”

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.