Individual Tax Expenditures, Credits, and Deductions

Federal Deductibility Is Distorting Tax Liability in Six States

The intentions behind federal deductibility are undoubtedly pro-taxpayer. Unfortunately, that is not what happens in practice. Tax liability is not reduced. It is distorted.

Coloradans to Vote on Structurally Unsound Property and Cannabis Tax Changes

What’s Going on with the Child Tax Credit Debate?

President Biden expanded and fundamentally changed the Child Tax Credit (CTC) for one year in the American Rescue Plan (ARP) passed in March 2021. Policymakers are now deciding the future of the expansion as part of the proposed reconciliation package, but a wide range of estimates for the effects of a permanent expansion is confusing the debate.

As Inflation Rises, So Will Tax Bills in Many States

Inflation is often called a hidden tax, but in many states it yields a far more literal tax increase as tax brackets fail to adjust for changes in consumer purchasing power.

Reviewing How TCJA Impacted Mortgage Interest and State and Local Tax Deductions

Two major provisions in the federal tax code have been limited since the Tax Cuts and Jobs Act (TCJA) of 2017: the state and local tax (SALT) deduction and the home mortgage interest deduction (MID).

2017 Tax Changes Increase the Benefit of Uncapping SALT Deductions for High Income Taxpayers

Our analysis illustrates how restoring the SALT deduction now would be more regressive than under prior law, strengthening the case for keeping the cap in place.

Reviewing Wyden’s Reconciliation Tax Policy Proposals

Congressional lawmakers are putting together a reconciliation bill to enact much of President Biden’s Build Back Better agenda. Many lawmakers including Senate Finance Committee Chair Ron Wyden (D-OR), however, want to make their own mark on the legislation.

Temporary Policies Complicate the Child Tax Credit’s Future

Over the next ten years, the structure of the Child Tax Credit (CTC) is scheduled to change, complicating efforts to extend enhanced CTC benefits or reform the CTC for the long-term. Rather than take an all-or-nothing approach or kick the can down the road by relying on temporary expansions, lawmakers could consider alternative options that better target low-income households, retain work incentives, reduce the impact on federal revenue, and provide taxpayers with a stable, consistent tax code.

The DASH Act Isn’t the Best Way to Solve the Housing Crisis

To tackle problems of homelessness and housing costs, Senator Ron Wyden (D-OR) has released a major tax proposal, the Decent Affordable Safe Housing (DASH) For All Act. Several of Wyden’s proposals are also components of the Biden administration’s infrastructure agenda, with a large focus on tax credits designed to either incentivize new housing or directly reduce rent burdens.

Don’t Add More Temporary Tax Policies in Budget Reconciliation

Temporary policy creates uncertainty for taxpayers and scheduling more expirations will add to the already-expiring provisions under the Tax Cuts and Jobs Act (TCJA) of 2017.

Reviewing Benefits of the State and Local Tax Deduction by County in 2018

It is important to understand how the SALT deduction’s benefits have changed since the SALT cap was put into place in 2018 before repealing the cap or making the deduction more generous. Doing so would disproportionately benefit higher earners, making the tax code more regressive.

Evaluating Trade-Offs of Expanded Premium Tax Credits as Enrollment Period Ends

August 15th was the deadline to take advantage of the premium tax credits originally provided in the Affordable Care Act and recently expanded in the American Rescue Plan. Future extensions may provide longer-lasting benefits, although the extensions may create trade-offs for consumer choice and program costs.

Here’s How Louisiana’s Tax Plan Would Simplify the Tax Code and Benefit Residents

Louisiana legislators passed a tax reform plan that has received overwhelming support in both the House and Senate, but voters will get the ultimate say on whether that plan succeeds. In light of this, it may be valuable to walk through what is included in these reforms and what effect the changes will have on taxpayers.

Amortization Deductions for Sports Teams Properly Part of the Income Tax System

The media has reported on how wealthy taxpayers who own sports teams lower their tax liability by deducting the cost of purchasing a sports team over 15 years. Contrary to claims that deducting the cost of a sports team from taxable income is a “loophole,” such deductions are a normal and proper part of the income tax system.

IRS Sends Nearly $15 Billion of Advance Child Tax Credit Payments

New Treasury Department data released on the advance Child Tax Credit payments shows the distribution by state, including how much, on average, households in each state received. The expansion will only be in effect for the 2021 tax year—if policymakers wish to continue providing the increased benefits, they must address the administrative and revenue costs of the policy.

Tax Expenditure

Unanswered Questions about Upcoming Advance Child Tax Credit Payments

Amidst the outstanding questions, potential confusion over how advanced child tax credit payments will affect tax refunds, and an incomplete portal to update taxpayer information, the IRS will begin sending payments to millions of households this month.

The Impact of the Biden Administration’s Tax Proposals by State and Congressional District

The redistribution of income from the Biden administration’s tax proposals would involve many winners and losers, not only across different types of taxpayers but also geographically across the country. Launch our new interactive map to see average tax changes by state and congressional district over the budget window from 2022 to 2031. 

Trade-offs of Expanding Individual Tax Credits While Repealing SALT Deduction

Expanding the generosity of tax credits for lower-income individuals can help make the tax code more progressive, but it also reduces federal revenue. Pairing a credit expansion with a tax offset may sustain federal revenue but can also hamper economic growth.

Details and Analysis of President Biden’s FY 2022 Budget Proposals

Explore President Biden budget proposals, including tax and spending in American Jobs Plan and American Families Plan. See Biden tax and spending proposals.