The Tax Cuts and Jobs Act (H.R. 1) was released on November 2nd. NATaT has a number of tax priorities, and here is an update on each of those priorities:
- Tax benefits for volunteer first responders (Volunteer Responder Incentive Protection Act*): Not included in the bill; will not be added to the House bill because it is not "revenue neutral," (it costs money and there's nothing to offset that cost). There are efforts to get the volunteer first responder provisions added in the Senate version of the bill (to be released on Thursday, November 9th).
- Tax-exempt municipal bonds: Preserved in the bill. A big win for NATaT!
- State and local tax (SALT) deduction**: Repealed; the bill would allow up to $10,000 in state/local property taxes to be deducted.
- Home mortgage interest deduction. Preserved, but reduced for future homebuyers; the bill allows the deduction to remain for existing mortgages (interest on mortgages of $1M and below is deductible), but reduces the deduction to $500,000 for new mortgages. (The interest deduction can be applied to the first $500,000 of a new mortgage.)
* The Volunteer Responder Incentive Protection Act (H.R. 1550/S. 1238) would exempt from federal taxes any property tax benefit provided to volunteer first responders by state and local governments (only used in NY), and would exempt up to $600 in other benefits provided to those volunteers (e.g., awards/appreciation dinner, memorabilia, small payments for service).
**What is the SALT Deduction?
State and local taxes that can be deducted from your federal taxes. Eligible SALT deductions are real and personal property, income and general sales taxes. These tax provisions have two important goals. First, by allowing taxpayers the ability to deduct state and local taxes, taxpayers avoid being taxed twice on the same income. Additionally, the deduction on property taxes provides a strong incentive for homeownership, and the sales tax deduction incentivizes spending, which facilitates economic growth.
Everyone in the United States benefits from SALT, but the SALT deduction is used directly by around 30% of all taxpayers. Currently, taxpayers are given the option of deducting real estate taxes as well as either income taxes or sales taxes paid to state and local governments.
The SALT deduction is used by Americans living in urban, suburban, and rural locations and across all congressional districts.