The new limit on the state and local tax deduction will hit nearly 11 million taxpayers nationwide this year, according to a report by a Treasury Department inspector general.
Bill Forsythe, 57, a hospital radiology technologist in San Jose, said he and his wife were unable to deduct all the $14,000 in property taxes on their home and their state income taxes from their federal return this year. That helped lead to a $9,000 combined state and federal tax bill this year after they had received a $6,000 refund last year.
But the cap was always viewed as a money-raiser by Republicans, who argued that it disproportionately benefited the wealthy. Democrats said the decision was political, noting that Trump carried only three of the top 10 states for SALT deductions in the 2016 election.Establishing the cap was a key way to raise additional revenue as part of the Republican tax overhaul, which official government estimates said would increase the federal budget deficit by $1.
The notice was “reviewed and approved by high-level Treasury officials” including Mnuchin, the report said. A spokesman for the inspector general, which is an independent watchdog within Treasury, said the parts of the report “containing IRS pre-decisional and deliberative material” were redacted from the public version of the report “in accordance with federal disclosure law.”
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