In an effort to increase the amount New Jersey residents are able to claim as a deduction on their federal income tax returns, two Assembly Democrats sponsor a resolution urging the federal government to raise the State and Local Tax (SALT) deduction.
The SALT deduction – in place since 1913 – allows taxpayers to deduct a number of local and state taxes if they itemize on their federal tax returns, rather than claim the standard deduction. Around 40 percent of New Jersey taxpayers have used the deduction in previous years.
However, in 2018 the SALT deduction was capped at a total of $10,000 for each taxpayer. As such, the resolution (AR-193) urges the federal government to return the deduction to $25,000.
The measure was inspired by recommendations from the coronavirus recovery Economic Advisory Council, established by Assembly Speaker Craig Coughlin, whose mission is to provide input and ideas to the State Legislature on how to move forward on COVID-19 recovery.
Upon the Assembly Commerce and Economic Development Committee advancing the measure on Wednesday, Assembly sponsors Vincent Mazzeo (D-Atlantic) and Robert Karabinchak (D-Middlesex) issued the following joint statement:
“The SALT cap has greatly impacted the many New Jerseyans who receive tax relief through this deduction. Our state contributes far more tax dollars to the federal government than we receive in return, which means this cap has made the unfair tax burden on our residents even greater. Especially now that the COVID-19 pandemic has caused financial hardship for so many families, it’s important for taxpayers to receive as much relief as possible. We call upon the federal government to raise the limit on SALT deductions back to its original $25,000.”