Middle- and upper-income Californians are expected to save a lot of money on their federal income tax next year as part of new congressional plans to allow them to deduct more local and state taxes.
A new plan in the House of Representatives would allow much higher deductions, up to $ 80,000 through 2030. The current deduction limit is $ 10,000, a cap imposed in the tax cut written by Republicans from 2017.
The proposal is part of the in-house version of the Biden administration’s $ 1.75 trillion spending bill. This would allow the deduction to be in effect this year. This means that people could subtract their state and local taxes on the return they file next year. It would also extend the break until 2031.
The House expects to vote on the measure on Friday.
Another plan is being proposed in the Senate that would limit the deduction to the less wealthy, such as those earning less than $ 400,000.
This was particularly hard on California, a state with the highest income tax rate, where 17.7% of taxpayers detailed in 2018.
In Sacramento County, the average state and local taxes per detailed taxpayer that year was $ 14,338, according to an analysis by the Tax foundation in Washington.
Other local areas were also affected by the cap. The El Dorado County average was $ 19,344. Placer County was $ 19,246. Yolo County was $ 17,890.
The San Francisco-Silicon Valley region would benefit from a big boost. The average state and local tax reported in San Francisco County per detailed taxpayer was $ 57,103. Others in this region included San Mateo County, $ 55,163; Marin County, $ 49,593 and Santa Clara County, $ 46,817.
California Tax Savings
Other national and local tax totals included:
▪ Fresno County, $ 16,632.
▪ San Luis Obispo County, $ 16,536.
▪ San Joaquin County, $ 14,153.
▪ Merced County, $ 11,604.
▪ County of Stanislas, $ 13,861.
▪ Tulare County, $ 13,127.
Liberals and independent analysts have complained that the break rewards the rich.
“This bill should invest in our families and our future – not give freebies to the wealthy few. The House’s SALT proposal cuts taxes for millionaires and billionaires at the expense of low- and middle-income families. We should solve this problem in the Senate, ”said Senator Michael Bennet, D-Colorado.
Efforts are underway to offer an alternative to the House plan.
“We are working on details that offer a sensible approach that protects the middle class but does not give massive tax breaks to the rich,” said Senator Bernie Sanders, Ind.-Vt.
An analysis through impartiality Tax Policy Center On Thursday it was found that the House plan was tilted in favor of the wealthiest taxpayers.
The latest plan “would bring little or no benefit to low- and middle-income households, but generate a substantial tax windfall for those with much higher incomes,” said Howard Gleckman, senior researcher at the center,
This story was originally published November 5, 2021 at 8:25 am.