In 2018, the overhaul of the tax code imposed a controversial $10,000 limit on state and local tax deductions on federal tax returns. The White House says the overhaul is saving the government over $57 billion – before the cap, SALT deductions cost the U.S. Treasury about $100 billion each year. But both high-income earners and middle-income tax brackets say this cap is unfair and will discourage people from purchasing and/or investing in their homes and will ultimately hurt economic growth.
The temporary repeal for 2020 and 2021 will have no impact on your tax liability this year, but this debate is likely far from complete and we’ll keep you posted.