H.R. 7160 / Chamber Supports
The U.S. House of Representatives may soon consider a bill that would increase the State and Local Tax (SALT) deduction cap to $20,000 from the current $10,000. Representative Michael Lawler (R-NY-17) authored the legislation, which was reported favorably by the House Rules Committee (8-5) and may be voted on as early as next week.
The SALT deduction allows individual taxpayers to reduce their taxable income up to $10,000 for taxes paid to state and local governments. Prior to 2017, the deduction was unlimited, but the $10,000 cap was added to the Tax Cuts and Jobs Act in part to generate additional revenue, which would offset other tax relief provisions. The cap is set to expire after 2025.
During the 2023 legislative session of the Indiana General Assembly, the Chamber advocated for Senate Bill 2, which would allow eligible taxpayers to elect to pay income tax at the business entity level rather than as individuals. The legislation is widely accepted as a workaround for the SALT deduction cap and Indiana was the 30th state to enact the policy. It is estimated that the tax relief provided by SB 2 is as much as $100 million statewide.
The Chamber supports the federal legislation to increase the cap to $20,000 as it will provide additional relief to taxpayers who did not opt to seek relief under SB 2 as well as those who are ineligible to take advantage of the policy. Ultimately, allowing the cap to expire or repealing it prior to 2025 will grant relief and certainty to tens of thousands of Hoosiers who may then redeploy their capital to enhance economic growth.
