Legislation to eliminate the State and Local Tax deduction (SALT) cap for tax year 2020 and 2021 was passed today by the House of Representatives. The bill also raises the cap for married joint filers for 2019.
“I have cosponsored legislation to get rid of the arbitrary, unfair SALT caps and the unacceptable added burden on NJ taxpayers,” said Rep. Chris Smith (R-NJ), who has long opposed SALT caps and who voted for today’s bill to eliminate them.
Smith, who voted in 2017 against the legislation that created the SALT cap, added, “Compared to what we get back, NJ already pays more than our fair share to the federal government. I am pleased to vote for the bill today and I will continue to fight to abolish this unjust tax on residents in my district and across the state.”
The 2017 tax law placed an across-the-board cap on SALT deductions of $10,000 per return, meaning even joint (married) filers are only able to deduct the same amount as a single filer. Today’s bill, HR 5377, will remove this SALT marriage penalty for tax year 2019, and will completely eliminate the cap for tax years 2020 and 2021 so filers can deduct all of their state and local taxes.
According to 2016 IRS data, before the 2017 tax law, 42 percent of New Jersey tax filers claimed the SALT deduction—tying New Jersey and Connecticut as the states with the second most SALT deduction claimants after Maryland’s 46 percent.
Additionally, this bill doubles the existing teacher tax credit from $250 to $500 for educators spending their own money on classroom supplies, and creates a new $500 deduction for first responders spending their own money on professional training and uniforms.
“These public servants give of themselves for the betterment of our communities, and allowing them to deduct these expenses is the least we can do,” Smith said.
Smith represents large sections of Monmouth, Ocean and Mercer counties. Each county’s board of chosen freeholders passed resolutions opposing the 2017 elimination of SALT deductions—in effect supporting Smith’s vote.
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