US Edition‘Donors’ vs ‘takers’: SALT battle stirs debate between blue and red states
- On May 22, 2025, the Republican-led House passed the 'One Big Beautiful Bill Act' under Speaker Mike Johnson, advancing President Trump's tax agenda.
- The bill responds to frustrations with the $10,000 federal SALT deduction cap enacted in 2017 and expiring after 2025, particularly affecting high-tax states like New York and California.
- The bill proposes increasing the SALT deduction cap to $40,000, with a gradual reduction for individuals earning over $500,000, expanding the tax benefit for pass-through business owners by raising the share of income eligible for deduction to 23%, and eliminating certain state-level methods that allowed these businesses to bypass existing SALT limits.
- Policy experts and AICPA warn that blocking the workaround would substantially disadvantage specified service trade businesses , as many cannot reorganize as C corporations and face no escape from this limitation.
- If enacted, the bill could shift tax burdens and reduce state revenues, sparking debate over costly subsidies benefiting wealthy taxpayers in high-tax states while challenging state budget balances.
7 Articles
7 Articles
Five Issues for States to Watch in the Federal Tax Debate
The House-passed tax plan includes more than 100 provisions, many of which could alter state tax policy and harm state budgets. This post covers five particularly notable provisions for states: increasing deductions for state and local taxes (SALT) paid, allowing more generous tax write-offs for businesses, offering new avenues for capital gains tax avoidance to people contributing to private school voucher funds, carving tips and overtime out o…
‘Donors’ vs ‘takers’: SALT battle stirs debate between blue and red states
President Trump’s domestic agenda bill is spurring a debate over whether blue states are subsidizing red states. After a successful pressure campaign from blue-state Republicans, the House version of Trump’s bill was amended to boost the state and local tax (SALT) deduction cap to $40,000. The agreement was a major win for a handful of…
Trump’s tax bill could end ‘SALT’ workaround for some businesses - Finnoexpert
Speaker of the House Mike Johnson, R-La., speaks to the media after the House narrowly passed a bill forwarding President Donald Trump’s agenda at the Capitol on May 22, 2025. Kevin Dietsch | Getty Images As Senate Republicans debate trillions of tax breaks advanced by the House, some business owners could be blocked from part of the proposed windfall, policy experts say. If enacted as written, the House GOP’s “One Big Beautiful Bill Act” would…
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