Letting the SALT cap slip further upwards would undercut the TCJA’s long-term legacy, worsening the fiscal outlook of the tax package and providing an unneeded benefit to higher earners.
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The fate of the $10,000 cap on state and local tax (SALT) deductions remains uncertain, with some policymakers pushing for an increase or repeal of the cap before its scheduled expiration in 2026.
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Any move to repeal the cap or enhance the deduction would disproportionately benefit higher earners, making the tax code more regressive.
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Our preliminary analysis finds the tax provisions increase long-run GDP by 0.8 percent and reduce federal tax revenue by $4.0 trillion from 2025 through 2034 on a conventional basis before added interest costs.
9 min read
As the Senate considers next steps for the House-passed “big, beautiful” tax bill, the battle lines have been drawn for a showdown over the state and local tax (SALT) deduction.
Our experts are providing the latest details and analysis of proposed federal tax policy changes.
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Republicans have advanced legislation to extend many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) alongside dozens of new provisions. Any comprehensive tax legislation is going to have its wrinkles, and the “One, Big, Beautiful Bill” is no different.
8 min read
For owners of pass-through businesses, the reconciliation package (1) raises the state and local tax (SALT) deduction cap, (2) denies the benefit of pass-through entity-level taxes that had previously worked around the SALT cap for such pass-through businesses, and (3) increases the Section 199A deduction for qualifying pass-through entities.
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As the US House hashes out its “One, Big, Beautiful Bill,” statehouse lawmakers are watching closely, given the impact of both its tax and spending provisions on state budgets.
12 min read
Letting the SALT cap slip further upwards would undercut the TCJA’s long-term legacy, worsening the fiscal outlook of the tax package and providing an unneeded benefit to higher earners.
4 min read
As lawmakers consider options for budgetary offsets, they should prioritize competitiveness and economic growth, as a heavier corporate tax burden will undermine the core purpose and achievement of the TCJA.
24 min read
The tax bill prioritizes politics over economic growth, writes Daniel Bunn.
Lawmakers should push against efforts to lift the SALT cap, and they should keep an eye toward bringing additional transparency to the tax system.
In a perilous economic and fiscal environment, with instability created by Trump’s trade war and publicly held debt on track to surpass the highest levels ever recorded within five years, a lot rides on how Republicans navigate tax and spending reforms in reconciliation.
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Permanently extending the Tax Cuts and Jobs Act would boost long-run economic output by 1.1 percent, the capital stock by 0.7 percent, wages by 0.5 percent, and hours worked by 847,000 full-time equivalent jobs.
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If Republicans want a successful year for tax reform, they must put aside the extensive demands for niche provisions and, instead, approach this debate with a principles-first mindset.
As Republicans look for ways to offset the budgetary cost of extending the expiring provisions of the Tax Cuts and Jobs Act (TCJA) and potentially enacting other tax cuts, the latest estimates indicate several trillion dollars could be raised by reducing tax credits and other preferences in the tax code.
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With so much emphasis on politics and procedure, the actual policy debate suffers.
Fiscal pressures are likely to weigh heavily on lawmakers as they craft a tax reform package. That increased pressure could result in well-designed tax reform that prioritizes economic growth, simplicity, and stability, or it could encourage budget gimmicks and economically harmful offsets. Lawmakers should avoid the latter.
8 min read
If Congress allows the Tax Cuts and Jobs Act (TCJA) to expire as scheduled, most aspects of the individual income tax would undergo substantial changes, resulting in more than 62 percent of tax filers experiencing tax increases in 2026.
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We estimate Trump’s proposed tariffs and partial retaliation from all trading partners would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.
12 min read
The stakes for next year’s expiring tax provisions are quite high. If Congress does nothing, then 62 percent of households will see their taxes go up in January of 2026.
If lawmakers are convinced that new revenues must be part of any long-term effort to solve the budget crisis or offset the cost of extending the TCJA, they must choose the least harmful ways of raising new revenues or else risk undermining their efforts by slowing economic growth.
7 min read