One of the most prominent debates around the Build Back Better bill before Congress has centered on a provision that may be in peril now that Build Back Better has stalled: a proposal to raise the state and local tax deduction for federal taxes from $10,000 to $80,000. U.S. Rep. Jared Golden and several senators have opposed this change, arguing that SALT expansion is a giveaway to the rich. Others have disagreed, claiming that middle-class families benefit from the deduction or that high-tax states and cities rely on it.

As a CPA tax preparer, I have seen the impact of the SALT limitation as part of the Tax Cuts and Jobs Act of 2017. Based on my analysis, the SALT provision in Build Back Better is a tax gift to high-income taxpayers, while providing virtually no benefit to ordinary, middle-class families. Further, little evidence supports the notion that it’s necessary for high-tax areas.

How did we get here? In 2017, the Tax Cut and Jobs Act capped the SALT deduction at $10,000. The cap was one of many deductions, exemptions and other gimmicks Republicans used to try to plug the $1.9 trillion hole created by their bill. Most of the Tax Cut and Jobs Act gave large tax breaks to the wealthy and corporations. Capping the SALT deductions actually raised taxes for some high-income taxpayers by limiting their ability to itemize deductions.

Fast forward to today, and the SALT deduction still skews heavily toward high-income taxpayers because they are subject to higher income and property taxes. With a SALT increase, these taxpayers are more likely to itemize deductions. The Tax Cut and Jobs Act increased the 2017 standard deduction for married taxpayers filing jointly from $13,000 to $24,000. It also eliminated exemptions. These changes resulted in far fewer taxpayers itemizing deductions. To qualify for the SALT deduction, a taxpayer must exceed the standard deduction to itemize deductions. In 2019, only 7 percent of Mainers itemized, mostly from higher-income households.

Even if a household does itemize, most don’t make enough money to benefit from the changes to SALT proposed in Build Back Better (the increase to $80,000), because only people with state and local tax bills greater than $10,000 would benefit. For context, the average Mainer pays only $5,492 in state and local taxes, well short of the $10,000 cap.

To illustrate how Build Back Better’s SALT provision would affect our friends and neighbors, I ran the numbers for two hypothetical Maine families. One family is an average middle-class Maine household with an annual income of $65,000. Based on the current standard deduction for married filing jointly of $25,100, it is highly unlikely they would itemize deductions. Thus, their federal tax bill would not change because of Build Back Better’s SALT provision.


In contrast, the second family’s annual household income is $1 million a year. With the increase in SALT, this family would itemize as a result of the increased SALT limit of $80,000. Specifically, through the SALT deduction, they would get a $20,313 federal tax break.

It’s simple: Middle-class families would see no benefit from Build Back Better’s changes to SALT, while high-income families would enjoy a windfall.

The other arguments in favor of Build Back Better’s SALT provision simply aren’t supported by the evidence. We know capping SALT hasn’t held back state and local governments from taxing the wealthy, since several states have taken steps to raise or increase progressive taxes since 2017. New York, for example, extended its 2-percentage-point tax rate increase on incomes over $1 million – raising the tax rate from 6.8 percent to 8.8 percent – for five years in 2019. And we know the idea that the super-rich move around in search of lower tax rates is a myth.

If the Build Back Better Act is designed to help ordinary American taxpayers by raising taxes on the wealthy, raising the SALT cap doesn’t belong in the bill. Rep. Golden is right to demand changes to the bill that will fix the SALT cap provision, and he is right to go a step further and call for including a billionaire’s tax in the legislation.

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