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 overhauled at the last minute, boosting refunds by $10,000 for millions this tax year.

The 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 – makes progress, the break would apply to the 2023 tax year.

The bill is being debated in the House of Representatives and would have to pass through the Senate, where opinions on the SALT provision are divided.

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

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

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

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

The change in law would apply to married couples who have a combined income of less than $500,000.

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

The increase would only apply to the 2023 tax year and would then revert to $10,000 through the end of 2025.

Unless extended, the provisions of Trump’s Tax Cuts and Jobs Act will expire on January 1, 2026, bringing major changes for millions of US taxpayers.

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

“This is a tax measure that focuses on the family and corrects injustices, and at the end of the day it’s about fairness,” Rep. Mike Lawler, R-N.Y., said during a committee hearing last week.

“We must finish the job and ensure this passes the Senate and is sent quickly to the President’s desk – hardworking, middle-class families across our country deserve this crucial 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 making more than $200,000.

Even at $10,000, the limit is still largely used by higher-income 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 single filers and $27,700 for married joint filers in 2023.

“The adjustment to the SALT cap will only benefit 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 in a rack.

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

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

The proposed plan would apply only to the 2023 tax year, and the cap would then return to $10,000 through 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 implemented — according to a report from the nonpartisan Peter G. Peterson Foundation.

While many argue it is a tax on the wealthy, some Democrats have said the SALT deduction cap also affects middle-income families living in states with high property and income taxes.

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

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

The bipartisan measure, which must still pass the Senate, could lift hundreds of thousands of children out of poverty.

The bill has received bipartisan support. In addition to help for parents, it also includes tax breaks for businesses, which helped it win support from Republicans.