Latest news with #StateandLocalTax
Yahoo
23-05-2025
- Business
- Yahoo
Tax bill: SALT deduction cap raised to $40K in GOP proposal
US House Speaker Mike Johnson (R-La.) is raising the proposed SALT (State and Local Tax) deduction cap to $40,000 in hopes of winning over moderates as lawmakers continue to deliberate over President Trump's so-called "big, beautiful" tax bill. Yahoo Finance Washington Correspondent Ben Werschkul explains how this change shifts pressure onto fiscal conservatives ahead of key votes on the spending plan. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. House Speaker Mike Johnson appears set to unveil changes to President Trump's quote-unquote big beautiful bill today, including a more generous deduction for state and local taxes. Here with more is Yahoo Finance's Ben Werschkul. So where are we, Ben, in this whole process? Yeah, Julie. So we're we're at crunch time here in Washington. Um, with a lot of issues. You mentioned the salt, the salt deduction was a big change um, today. Uh, it's going to $40,000 in the in the in the bill from it's $10,000 annually currently. Johnson's initial offer was $30,000 and he's upped it further to $40,000. We have signs that the salt, these kind of salt, the salt caucus is in favor of that, so it may help take that issue on off the table. But it's shifted the focus to fiscal conservatives, who are meeting with Trump this hour at the White House to try to work out their their range of issues there. And this is the largest and the most um, kind of immovable, so far at least, group um, in all these negotiations with way more than enough members to sink this bill if they want to. And it comes as Trump and Johnson want to have a a vote on this as soon as tonight. Um, the the issue on a policy front here for Johnson is that giving into the fiscal conservatives on some of the additional cuts they need, uh, they want on issues like Medicaid could sink the bill with moderates. So what the playbook appears to be right now on this group is essentially hardball. So I think this is a meeting that's going to have a lot of arm twisting, a lot of forcing. Um, the group, this Freedom Caucus, went into this meeting saying the bill's not ready, they're not going to vote yes today. They're they want they want more days to negotiate. We'll see what the tone is coming out of the meeting um, in the in the next hour or so. All right, Ben. Thank you. Appreciate it. Sign in to access your portfolio
Yahoo
23-05-2025
- Business
- Yahoo
What is the SALT deduction that's dividing Republican lawmakers?
Republicans are split over raising the SALT (State and Local Tax) deduction cap as part of their new tax bill. Morning Brief host Madison Mills explains why the $10,000 cap is a key issue for lawmakers from high-tax states. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. What is the SALT deduction cap, and why is it such a sticking point for the Republican Party in its tax bill? To understand why GOP lawmakers are clashing over the cap, let's take a step back and look at what the SALT deduction is. SALT stands for state and local taxes. When people pay taxes to their city or state, they can subtract those payments from their federal taxes. This is called a tax deduction. It lowers the amount of income the federal government can tax you on. But in 2017, the Tax Cuts and Jobs Act capped the SALT deduction at $10,000 per household. Prior to that, there was no limit on how much you could deduct. And this change hit hard for people in high-tax states like New York or California, and for homeowners who also pay high property taxes. They couldn't deduct as much, which meant they owed more in federal taxes. The 2017 SALT cap is set to expire this year unless Congress takes action. And that brings us to the Republican tax bill. Speaker Mike Johnson says Republicans came to an agreement with holdouts from higher-tax states to raise the cap to $40,000. The agreement comes just one day after the president urging House Republicans to pass the tax bill in a visit over to Capitol Hill. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
What Trump's tax bill means for parents, seniors, and workers
The House of Representatives passed President Trump's "big, beautiful tax bill" by a single vote, sending it to the Senate after last-minute changes and all-night debate. Wealth host Brad Smith breaks down what's in the bill, including extended tax cuts, changes to the State and Local Tax (SALT) deduction cap, a boost to the child tax credit, and new work requirements for Medicaid and food assistance. To watch more expert insights and analysis on the latest market action, check out more Wealth here. The House passed President Trump's quote big beautiful tax bill by just one vote, 215 to 214. The bill now heads to the Senate following a week of last minute changes and all night debates. House Speaker Mike Johnson says he wants to get the bill signed into law by July 4th. So what's in it for you? First, the bill extends individual rates in the 2017 Tax Cuts and Jobs Act signed by the president, President Trump in his first term. That means the top tax rate for the highest earners stays at 37% while the lowest rate remains at 10%. A major change for taxpayers, the salt deduction. That's the amount that you can deduct for state and local taxes on your federal return. The cap would increase to $40,000 from $10,000 for joint filers, but only for households making under $500,000. This is a big deal for taxpayers in high tax states like New York, New Jersey and California where local taxes can really add up. Critics say this benefits wealthier households and will add further to the national debt, but supporters say it brings back a level of fairness. The tax bill will also fulfill Trump's campaign promises to eliminate taxes on tips, overtime, and loan interest on American-made cars, although those provisions would expire in 2029. And there's some benefits for parents in the bill, the child tax credit would increase to $2,500 per kid, that's up from the current $2,000. And parents of some newborns could get a $1,000 account invested in the market in the child's behalf. Seniors would also get a boost including a new $4,000 bonus deduction for Americans 65 and up, but it phases out for individuals who earn more than $75,000 or couples making over $150,000. On the spending side, the bill tightens the rules for government benefits. Starting at the end of 2026, childless, able-bodied adults need to work 80 hours per month to qualify for Medicaid benefits. The Congressional Budget Office estimates these changes could lead to 7.6 million Americans losing health insurance over the next 10 years. Additionally, the bill's changes to the Affordable Care Act are expected to cut coverage from several million additional adults. The legislation also cuts billions in federal funding for SNAP, the Supplemental Nutrition Assistance Program, putting the onus on states to cover more of the cost. More than 40 million Americans rely on this food assistance program. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
How a $40,000 SALT deduction cap could affect your tax bill
The House of Representatives just approved a tax bill that could raise the State and Local Tax (SALT) deduction cap for some Americans. Wealth host Brad Smith breaks down who would benefit if the bill is passed and what it means for your 2025 tax return. To watch more expert insights and analysis on the latest market action, check out more Wealth here. The tax bill passed by the house has a major change for Americans. The salt deduction, that's the amount that you can deduct for state and local taxes on your federal return. That means it can reduce the amount of income subject to federal tax, potentially lowering your overall tax bill. It can be used or at least it used to be that there was no salt cap, but that changed when the 2017 tax cuts and jobs act became law. And that legislation implemented a $10,000 cap on deductions to help pay for the tax cuts, angering lawmakers from high tax states. Under the new legislation passed by the house, one, the senate still needs to sign off on the salt cap, essentially would increase to $40,000 from $10,000, but only for households making under $500,000. Critics say that this benefits wealthier households and will add further to the national debt, but supporters say it brings back a level of fairness, particularly in high tax states like New York, New Jersey and California. It's also important to note that you must itemize deductions in order to get the salt benefits. So for some, it may not be worth it. Let's look at some examples. Take, for instance, a single filer in California who makes $150,000 and pays $15,000 in state and local taxes. Under current law, their salt deduction would be $10,000. Compare that to the 2025 standard deduction of $15,000 for single filers. This person, they're probably going to take that standard deduction over the salt deduction. If this $40,000 cap becomes law, they could deduct all $15,000 in state and local taxes, which equals the standard deduction, meaning they get no additional savings benefit. Now, let's take a married couple in New York who make $400,000 and pay $40,000 in state and local taxes. Well, under current law, they can only deduct $10,000 in salt, so they'd take the standard deduction of $30,000. With the new $40,000 salt cap, they could deduct all $40,000 in state and local taxes. This gives them an additional $10,000 in deductions compared to the standard deduction, saving them about $3,200 in federal taxes. So this example also highlights the so-called marriage penalty. The $40,000 deduction cap is the same for both individual filers and married couples filing jointly. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
How a $40,000 SALT deduction cap could affect your tax bill
The House of Representatives just approved a tax bill that could raise the State and Local Tax (SALT) deduction cap for some Americans. Wealth host Brad Smith breaks down who would benefit if the bill is passed and what it means for your 2025 tax return. To watch more expert insights and analysis on the latest market action, check out more Wealth here. Sign in to access your portfolio
