On December 19th, the House of Representatives passed legislation to eliminate the $10,000 limit on deductions for State and Local Taxes (SALT) for 2020 and 2021, double the deduction to $20,000 for couples for 2019, and pay for the changes by permanently restoring the top marginal tax rate for individuals to 39.6 percent.
House Democrats only narrowly approved the bill, which passed by a vote of 218-206. House Republicans submitted an amendment to maintain the SALT cap on deductions for taxpayers earning more than $100 million per year, and direct the saved money to a $500 tax break for teachers and first responders. House Democrats overwhelmingly agreed to the amendment and incorporated it into the legislation, despite opposition from liberal lawmakers in the Congressional Progressive Caucus. Representative Mike Thompson (D-Napa) said the motion was accepted “in the spirit of the holiday season.”
Despite passage in the House, Senate Republicans have signaled they will not bring the bill to a vote in the Senate, and the White House has also expressed opposition. As such, the passage in the House was largely viewed as a messaging victory for Democrats, many of whom were elected last year in wealthy, suburban areas where the SALT cap had raised some voters’ taxes.