SALT

The argument going on in congress regarding the State and Local Tax Deduction (SALT) has a misleading past. Prior to 2018 the SALT was offset by the Alternative Minimum Tax (AMT). The Trump tax cuts of 2017 removed the AMT and placed a $10,000 limit on SALT. This allowed wealthy people to once again deduct their state and local tax but only up to $10,000. The house bill raised this to $40,000 with a phase out for people with incomes over $500,000. The senate version keeps the SALT limit at $10,000. The SALT benefits a small number of rich people since they pay the highest state income tax and 90% of tax payers use the standard deduction which means the SALT does not affect them.