As Congress considers comprehensive tax reform, a top priority for county officials is preserving the deductibility of state and local taxes (SALT). To demonstrate the importance of this deduction to counties across the country, NACo just released a new resource: county-by-county and state-by-state SALT profiles.
NACo’s profiles show that repealing SALT would impact middle class families and home owners in every county across the country. These impacts are not limited to high tax states, or even states with a state income tax. In fact, local authority, decision making and budgets would suffer in every state without this deduction.
The SALT deduction allows individuals to deduct their state income or sales and local property taxes from their federally taxable income. It also provides state and local governments with the flexibility and tax authority necessary to provide essential services, including education, infrastructure and public safety. NACo believes local governments are best positioned to provide local services and solve local problems, and local officials rely on this deduction to ensure they can serve their constituents.
The new SALT profiles detail the following pieces of information:
- How many tax filers in each county use the SALT deduction. Importantly, this does not capture the full scope of the deduction, as one tax return could represent a married couple or even a large family. The true number of those benefiting from the deduction is much larger.
- What percentage of filers benefiting from the SALT deduction make under $200,000 annually. This represents the portion the middle class represents of those who rely on the deduction.
- How many total dollars were deducted through SALT in 2015. This includes state and local taxes, which are then used to provide vital services.
- What percentage of the total amount deducted through SALT went to the middle class. This represents the portion of SALT benefits reaching the middle class, which in many cases is over 65 percent.
- The average SALT deduction in each county and state. This number represents additional income that would be taxed if not for the deduction. Even in states without state income taxes, this number often climbs above $6,000.
NACo will continue advocating for local control and local taxpayers as tax reform discussions continue, as well as other essential county interests, including the tax-exempt status of municipal bonds.
Additional NACo Resources: