Revamp of Trump-era tax law could bring a $10k boost for millions of married couples for this year’s return – details on how YOU qualify

A Trump-era tax law could be in line for a last-minute overhaul — boosting refunds by $10,000 for millions this tax year.

Proposed legislation would double the limit for the state and local tax deduction — known as SALT — from $10,000 to $20,000 for married couples.

If the law – sponsored by Rep. Michael Lawler, a Republican from New York – moving forward, the break would apply to the 2023 tax year.

The bill is being considered in the House and will have to pass through the Senate, where opinions on the SALT provision are mixed.

Congress capped the deduction for both individuals and married couples at $10,000 after sweeping changes to the tax landscape introduced by former President Trump in 2017.

Rep.  Mike Lawler, RN.Y.  proposed the legislation that would double the limit for the state and local tax deduction

Rep. Mike Lawler, RN.Y. proposed the legislation that would double the limit for the state and local tax deduction

Before a cap on the SALT deduction, taxpayers could deduct their state and local taxes from their federal taxes — which some policymakers say primarily benefited wealthy Americans in high-tax states like California and New York.

But others argue that the $10,000 limit is a marriage penalty — since the same dollar amount applies to both individual and married taxpayers.

Many tax breaks, including the standard deduction, are higher for married couples filing jointly because their returns can reflect income for two people.

The change to the law will apply to married couples filing jointly with an income under $500,000.

If enacted, the legislation would mean that eligible Americans could double their refund for the current tax filing season, which began on January 29 and ends on April 15.

The increase will only apply to the 2023 tax year, and will then return to $10,000 until the end of 2025.

Unless the provisions brought in under Trump’s Tax Cuts and Jobs Act are extended, they will expire on January 1, 2026, causing major changes for millions of taxpayers across the US.

Congress capped the deduction for both individuals and married couples at $10,000 after sweeping changes to the tax landscape introduced by former President Trump in 2017.

Congress capped the deduction for both individuals and married couples at $10,000 after sweeping changes to the tax landscape introduced by former President Trump in 2017.

“This is a pro-family tax measure that right a wrong, and it’s ultimately about fairness,” said Rep. Mike Lawler, RN.Y., said in a committee hearing last week.

“We need to get the job done and get it passed in the Senate and sent quickly to the president’s desk — hard-working, middle-class families across our country deserve this critical relief,” he added in a statement.

But the nonpartisan Tax Foundation found that the vast majority of those who would benefit from doubling the cap would be wealthy Americans earning more than $200,000.

Even at $10,000, the limit is still mostly taken by higher earners who have enough other deductions to make it worth itemizing rather than taking the standard deduction.

The majority of Americans claim the standard deduction, which increased to $13,850 for singles and $27,700 for married, joint filers in 2023.

“The adjustment to the SALT limit benefits only taxpayers who choose to itemize their deductions and pay more than $10,000 in state and local income or sales and property taxes,” the think tank said. statement.

It estimates the change will cost about $11.7 billion in lost federal tax revenue.

If the proposed change were extended to 2024 and 2025, it would cost another $25.5 billion over those two years, the think tank predicts.

The proposed plan would only apply to the 2023 tax year, and the limit would then fall back to $10,000 until the end of 2025

The proposed plan would only apply to the 2023 tax year, and the limit would then fall back to $10,000 until the end of 2025

By comparison, the SALT deduction cost the federal government $69 billion in tax revenue in 2017 — the year before the $10,000 limit was brought in — according to a report from the nonpartisan Peter G. Peterson Foundation.

While many argue it’s a tax on the wealthy, some Democrats said the SALT deduction cap also hits middle-income families who live in states with high property and income taxes.

“The cap on the SALT deduction remains a blow to our home states of New York and New Jersey as we work to recover from the pandemic and get our economies back on a strong footing and get our constituents back to work ,’ said Democrats Tom Suozzi of New York and Josh Gottheimer and Mikie Sherrill of New Jersey CBS.

This comes after the House passed another tax bill earlier this month to expand the child tax credit.

The bipartisan measure, which has yet to pass the Senate, could lift hundreds of thousands of children out of poverty.

The bill received support from both parties. In addition to helping parents, it also includes tax breaks for businesses, which has helped it gain support from Republicans.