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Raising the current $10,000 cap on the State and Local Tax (SALT) deduction would primarily benefit high earners. Further increasing the cap above the House reconciliation bill proposal – a $30,000 cap for households making less than $400,000 – would almost exclusively benefit high earners.
Other analyses have shown that raising the SALT cap would primarily benefit the rich nationwide. We show that even in a high tax area, raising the cap above $30,000 and raising or removing the income limit would deliver nearly all the tax cuts to households making $400,000 or more, with the benefit rising with income. In Washington, DC, the deal announced by House leadership to raise the cap to $40,000 and to slowly phase it out above $500,000 in income would deliver a nearly $10,000 tax cut to our illustrative household making $500,000 and a $7,000 tax cut to a household making $600,000 relative to extending the $10,000 cap.
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