Political decision -makers will soon be decide of the state and local taxA tax is a payment or compulsory costs collected by local, state and national governments of individuals or companies to cover the costs of general services, goods and government activities.
(SALT) Deduction stroke when they plan to extend the expired provisions of the 2017 law on tax reductions and jobs (TCJA). Since 2018, individual salt deductions have been capped at $ 10,000, compensating for part of the cost of broader tax reductions. These cuts for individuals all expire after the end of this year.
The imminent expirations have sparked a more generous debate on the reconciliation package of the congress, as well as possible limits on bypass solutions and salt deductions taken by companies. Although business salt cap may increase additional income, this may slow down economic growth.
The prohibition of deductions on the salt of companies for income tax would increase $ 209.4 billion over 10 years on a conventional basis, while prohibiting salt deductions for companies property taxA property tax is mainly perceived on real estate such as land and buildings, as well as on tangible personal goods which are mobile, such as vehicles and equipment. Land taxes are the largest source of state and local income in the United States and help finance schools, roads, police and other services.
would increase $ 222.9 billion over 10 years (see Table 1).
In addition to new limits to corporate salt deductions, decision -makers can more broadly adjust commercial salt deductions thanks to new limits to passing salt deductions, companies such as partnerships, individual companies and S.
In many states, business owners can avoid individual salt ceiling through bypass solutions. The bypass solutions strategically allow the owners of passing to pay the taxes of the States at the level of the company, which is eligible for a complete deduction against Federal Individual income taxAn income tax of individuals (or income tax of individuals) is charged to wages, wages, investments or other forms of income that an individual or a household wins. The United States imposes a progressive income tax where rates increase with income. Federal income tax was established in 1913 with the ratification of the 16th amendment. Although barely 100 years, individual income taxes are the greatest source of tax revenue in the United States
.
Certain bypass solutions are authorized by the IRS under the current law, but decision -makers can choose to prohibit them. We believe that the end of the end of the end would increase approximately $ 211.1 billion over 10 years on a conventional base under a permanent salt ceiling of $ 10,000.
Under the current law, passing owners can fully deduct land taxes associated with their business. If decision -makers have prohibited land tax deductions for passes, this would increase $ 281.2 billion over 10 years on a conventional basis. This option would probably be associated with similar treatment for C.
In total, the repeal of business income and land tax deductions would increase around $ 924.5 billion in conventional revenue over 10 years compared to TCJA permanence, reducing the permanence cost of 3.5 billions of dollars to 2.6 billions of dollars over 10 years.


Table 1. Estimates of conventional income at 10 years of the prohibition of tax deductions from the commercial and local state and the taking of individual TCJA provisions (billions of dollars)
Source: Tax Foundation General Equilibrium Model, May 2025. Note: The individual permanence of TCJA includes the impact of income from the deduction limit of $ 10,000 permanent individual.
The corporate salt deduction limits would provide significant income to help compensate for a permanent extension of the individual provisions of TCJA. But the limits would have a substantial economic cost. The repeal of salt deductions for companies' income and land taxes would reduce long -term GDP by 0.6% and the repeal of salt deductions for income and property taxes would further reduce GDP by 0.7%.
Overall, the prohibition of salt deductions for commercial properties and income taxes would reduce the long -term GDP by 1.3%, which would compensate for more than 0.4% of GDP of GDP from making the individual provisions of TCJA permanent. The association of permanent individual tax decays of TCJA with new limits to corporate salt deductions would reduce the economy, reduce American revenues and increase the federal budget deficit, undergoing the political objectives of the permanence of TCJA.


Table 2. Long -term economic effects of the prohibition of tax and local tax deductions and the taking of individual provisions of the permanent TCJA
Source: Tax Foundation General Equilibrium Model, May 2025.
Note: The elements may not summarize due to rounding and interaction effects. The individual permanence of TCJA includes the economic impact and revenues of the deduction limit of $ 10,000 of $ 10,000 permanent. GNP estimates include the impact of federal budget deficit changes on American income.
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