Latest news with #GarrettWatson
NBC News
22-05-2025
- Business
- NBC News
House Republican tax bill passes 'SALT' deduction cap of $40,000. Here's who benefits
House lawmakers on Thursday morning passed changes for the federal deduction for state and local taxes, known as SALT, as part of President Donald Trump 's tax package. Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there's currently a $10,000 limit on the SALT deduction, and raising that cap has been a priority for certain House lawmakers in high-tax states like New York, New Jersey and California. Filers must itemize deductions to claim the tax break for SALT. If the House provision is enacted, the SALT cap would rise to $40,000, up from $30,000 in the previous plan, and phases out over $500,000, according to revised language released by the House Rules Committee. The provision would go into effect in 2025. The SALT cap and income phaseout would increase annually by 1% from 2026 through 2033, according to the text. The revised text would also reduce itemized deductions for certain taxpayers in the 37% income tax bracket, which could lower the benefit of the higher SALT cap. For 2025, the top rate of 37% applies to individuals with taxable income above $626,350, and married couples filing jointly earning $751,600 or more. However, the House proposal for changes to the SALT deduction could still face pushback in the Senate. Before TCJA, the SALT deduction was unlimited, but the so-called alternative minimum tax reduced the benefit for some higher earners. How the SALT deduction works When filing taxes, you pick the greater of the standard deduction or your itemized deductions, including SALT capped at $10,000, medical expenses above 7.5% of your adjusted gross income, charitable gifts and others. Starting in 2018, the Tax Cuts and Jobs Act doubled the standard deduction, and it adjusts for inflation yearly. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. These could increase under the House-proposed tax bill. Under the current thresholds, the vast majority of filers — roughly 90%, according to the latest IRS data — use the standard deduction and don't benefit from itemized tax breaks. Who benefits from the higher SALT cap 'Any changes to lift the cap would primarily benefit higher earners,' Garrett Watson, director of policy analysis at the Tax Foundation, wrote in an analysis on Tuesday. With an income phaseout over $400,000, the top 20% of taxpayers 'would be the only group to meaningfully benefit,' Watson wrote. But members of the so-called SALT Caucus contend the deduction limit is a middle-class issue in their districts. Rep. Josh Gottheimer, D-N.J., co-chair of the SALT Caucus, told CNBC's 'The Exchange' on Tuesday that a full repeal of the $10,000 SALT deduction limit would be a 'huge tax cut and benefit for middle-class families around the country.' Weekly advice on managing your money SIGN UP NOW Get this delivered to your inbox, and more info about about our products and signing up for newsletters, you are agreeing to our Terms of Use and Privacy nowVIDEO04:03Rep. Josh Gottheimer on SALT: 'Red moocher states' expect the Northeastern U.S. to pay for them
CNBC
22-05-2025
- Business
- CNBC
House Republican tax bill passes 'SALT' deduction cap of $40,000. Here's who benefits
House lawmakers on Thursday morning passed changes for the federal deduction for state and local taxes, known as SALT, as part of President Donald Trump's tax package. Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there's currently a $10,000 limit on the SALT deduction, and raising that cap has been a priority for certain House lawmakers in high-tax states like New York, New Jersey and California. Filers must itemize deductions to claim the tax break for SALT. If the House provision is enacted, the SALT cap would rise to $40,000, up from $30,000 in the previous plan, and phases out over $500,000, according to revised language released by the House Rules Committee. The provision would go into effect in 2025. The SALT cap and income phaseout would increase annually by 1% from 2026 through 2033, according to the text. More from Personal Finance:Senate passed a surprise 'no tax on tips' bill. What it could mean GOP aims to axe EV, green tax credits. Act 'now' to claim, experts sayTrump tariffs create the 'perfect storm' for financial scams The revised text would also reduce itemized deductions for certain taxpayers in the 37% income tax bracket, which could reduce the benefit of the higher SALT cap. For 2025, the top rate of 37% applies to individuals with taxable income above $626,350, and married couples filing jointly earning $751,600 or more. However, the House proposal for changes to the SALT deduction could still face pushback in the Senate. When filing taxes, you pick the greater of the standard deduction or your itemized deductions, including SALT capped at $10,000, medical expenses above 7.5% of your adjusted gross income, charitable gifts and others. Starting in 2018, the Tax Cuts and Jobs Act doubled the standard deduction, and it adjusts for inflation yearly. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. These could increase under the House-proposed tax bill. Under the current thresholds, the vast majority of filers — roughly 90%, according to the latest IRS data — use the standard deduction and don't benefit from itemized tax breaks. "Any changes to lift the cap would primarily benefit higher earners," Garrett Watson, director of policy analysis at the Tax Foundation, wrote in an analysis on Tuesday. With an income phaseout over $400,000, the top 20% of taxpayers "would be the only group to meaningfully benefit," Watson wrote. But members of the so-called "SALT Caucus" argue the SALT deduction limit is a middle-class issue in their districts. Rep. Josh Gottheimer, D-NJ., co-chair of the SALT Caucus, told CNBC's "The Exchange" on Tuesday that a full repeal of the $10,000 SALT deduction limit would be a "huge tax cut and benefit for middle-class families around the country."
Bloomberg
21-04-2025
- Business
- Bloomberg
Millionaire Tax Would Generate About $400 Billion in Revenue
A Republican proposal to impose a tax hike on millionaires offers to generate about $400 billion over a decade, according to two new estimates provided to Bloomberg News, providing fresh revenue to partially offset the cost of the party's multi-trillion-dollar tax package. The Budget Lab at Yale projects that taxing income over $1 million at a 40% rate would generate $420 billion over a decade. The Tax Foundation in its own preliminary analysis finds that the new bracket would raise $358 billion over the same 10-year period, according to Garrett Watson, the director of policy analysis for the think tank.
Bloomberg
26-03-2025
- Business
- Bloomberg
Republicans Get to Work on Tax Cut Bill, Signal Scandal
"Balance of Power" focuses on the intersection of politics and global business. On today's show, Garrett Watson, Director of Policy Analysis at the Tax Foundation, discusses whether he sees Republican Congressional lawmakers extending President Trump's tax cuts or making them permanent. Rep. Raja Krishnamoorthi (D) Illinois discusses the Signal scandal that involved a journalist from the Atlantic being added to a Signal chatroom where top US officials shared war plans. Wendy Sherman, Joint Senior Fellow with the Belfer Center & Center for Public Leadership at Harvard University, shares her thoughts on what is really happening in terms of truce talks between the United States and Russia. (Source: Bloomberg)
