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How are SALT Deductions Legal?
Posted on 6/2/26 at 5:01 pm
Posted on 6/2/26 at 5:01 pm
Since we're talking about taxes a lot around here in Florida, I thought it would be a good time to bring this up as well.
How are SALT deductions for federal taxes even remotely legal?
Now correct me if I'm wrong, I know I'm no tax expert, but here is how it seems to work in my brain. Let's say my federal tax bill is $4,000 each year and I pay the $4,000 to the federal government. Now we have someone who lives in New York or California who also has the same $4,000 federal tax bill. But they live in New York or California, so let's say they have $2,000 in a state tax bill. Since I've lived in Florida for so long I really don't know a lot about how the SALT deductions work, but let's say this fictional person can deduct $1,000 off of their $2,000 state tax bill.
Yes, technically the person living in New York or California is still paying more. They are paying $5,000 in total tax liability compared to myself who is paying $4,000 in total tax liability. The difference is, every penny of my $4,000 went to the federal government. Only $3,000 of the other person's money went to the federal government. Effectively, those of us in no income tax states are paying more in federal taxes than those in states with income taxes with a similar income.
I know why the Democrats like this. It lets them raise taxes but yet they don't really fully feel the tax increase. To me it incentivizes passing local and state taxes, knowing people can just deduct it from their federal tax.
Scr*w that, people in the blue states need to be feeling the full brunt of the tax increases they voted for. Maybe then they would change their tune to some extent. And maybe I'm missing something, or a lot, but again how have SALT deductions not be struck down? Because from my view, SALT deductions essentially screw over those of us who live in states with no income tax.
How are SALT deductions for federal taxes even remotely legal?
Now correct me if I'm wrong, I know I'm no tax expert, but here is how it seems to work in my brain. Let's say my federal tax bill is $4,000 each year and I pay the $4,000 to the federal government. Now we have someone who lives in New York or California who also has the same $4,000 federal tax bill. But they live in New York or California, so let's say they have $2,000 in a state tax bill. Since I've lived in Florida for so long I really don't know a lot about how the SALT deductions work, but let's say this fictional person can deduct $1,000 off of their $2,000 state tax bill.
Yes, technically the person living in New York or California is still paying more. They are paying $5,000 in total tax liability compared to myself who is paying $4,000 in total tax liability. The difference is, every penny of my $4,000 went to the federal government. Only $3,000 of the other person's money went to the federal government. Effectively, those of us in no income tax states are paying more in federal taxes than those in states with income taxes with a similar income.
I know why the Democrats like this. It lets them raise taxes but yet they don't really fully feel the tax increase. To me it incentivizes passing local and state taxes, knowing people can just deduct it from their federal tax.
Scr*w that, people in the blue states need to be feeling the full brunt of the tax increases they voted for. Maybe then they would change their tune to some extent. And maybe I'm missing something, or a lot, but again how have SALT deductions not be struck down? Because from my view, SALT deductions essentially screw over those of us who live in states with no income tax.
This post was edited on 6/2/26 at 5:02 pm
16
Posted on 6/2/26 at 5:06 pm to TheMagicMan
You are on the wrong path here. Salt deductions are not a direct tax deduction but rather a reduction in taxable income.
Posted on 6/2/26 at 5:07 pm to ValZacs
quote:Yep.
You are on the wrong path here. Salt deductions are not a direct tax deduction but rather a reduction in taxable income.
This post was edited on 6/2/26 at 5:08 pm
Posted on 6/2/26 at 5:10 pm to ValZacs
quote:
You are on the wrong path here. Salt deductions are not a direct tax deduction but rather a reduction in taxable income.
But does that not still result in paying less federal taxes? Since like you said, you are lowering your taxable income in a way those of us in no income tax states can not.
Even if it's not a direct deduction, the result still seems to be the same. Again, why should someone in a no income tax state be paying more in federal taxes than someone in an income tax state with a similar income?
This post was edited on 6/2/26 at 5:13 pm
Posted on 6/2/26 at 5:13 pm to TheMagicMan
I see your point in how this potentially helps high tax blue states more, and that sucks. But I am also not going to complain a tax deduction for property owners, especially since it helps me in Louisiana
Posted on 6/2/26 at 5:15 pm to TheMagicMan
Well, first you have to have enough deductions to use Schedule A, or you can’t claim it anyway. So, state and local income taxes as well as property taxes can be itemized just like mortgage interest, medical expenses above a certain % threshold, etc. But if it doesn’t exceed your std deductiin, combined, you get nothing anyway.
Posted on 6/2/26 at 5:19 pm to ValZacs
quote:
Well, first you have to have enough deductions to use Schedule A, or you can’t claim it anyway. So, state and local income taxes as well as property taxes can be itemized just like mortgage interest, medical expenses above a certain % threshold, etc. But if it doesn’t exceed your std deductiin, combined, you get nothing anyway.
I'm guessing though that if you have a mortgage, that alone probably gets you close enough to exceeding the standard deduction. So I imagine the vast majority of people who own a home, townhome, condo meet that requirement.
Now I could see where people who rent would be screwed, as I doubt their deductions would exceed the standard deduction. But I imagine most homeowners easily exceed the standard deduction.
Posted on 6/2/26 at 5:32 pm to TheMagicMan
The SALT deduction is legal because Congress put it in the tax code, and the cap on the deduction is legal because Congress has the power to change its own rules.
Posted on 6/2/26 at 5:38 pm to TheMagicMan
First, don’t confuse deductions with credits. Second, Congress can make anything they want deductible. Fifty years ago, you could deduct tons of personal expenses. Back then, all interest paid (including interest paid on credit cards) were deductible. In 1986, Congress took back all of those deductions and instead lowered the top marginal tax rate to 28%. It didn’t take the Democrats long to raise that tax rate to 39% (under Clinton) but still making all of those personal expenses nondeductible. It’s now at 37%. The deal was supposed to be that you would lose all the personal expenses, but have a 28% maximum tax rate. That was just a complete f*cking lie.
Posted on 6/2/26 at 5:51 pm to TheMagicMan
100%
Posted on 6/2/26 at 6:03 pm to ValZacs
quote:
You are on the wrong path here. Salt deductions are not a direct tax deduction but rather a reduction in taxable income.
And you are wrong thinking that in anyway invalidates his hypothetical argument. The point stands. California and NY etc are giving tax breaks at the federal level that they should not be getting. It is an a valid point of contention.
This type of bullshite tax breaks is exactly why I have always argued for a flat tax. If you raise taxes you raise them on EVERYONE. No pitting one group against another. It is the only fair way to do it.
Posted on 6/2/26 at 6:11 pm to TheMagicMan
How are any income taxes legal?
We need to go back to 1776, tax commerce only (lightly) or die.
We need to go back to 1776, tax commerce only (lightly) or die.
This post was edited on 6/2/26 at 6:12 pm
Posted on 6/2/26 at 6:15 pm to TheMagicMan
I think it’s unconstitutional for Congress to treat States differently but they can treat individuals however they want.
Posted on 6/2/26 at 6:55 pm to TheMagicMan
Take the win that you live in a no income tax state. I’ve often pondered the tax code but end up just trying to circumvent it.
This post was edited on 6/2/26 at 6:56 pm
Posted on 6/2/26 at 6:58 pm to TheMagicMan
quote:
I'm guessing though that if you have a mortgage, that alone probably gets you close enough to exceeding the standard deduction.
Nah man. It really doesn't.
Posted on 6/2/26 at 7:03 pm to TheMagicMan
quote:
Because from my view, SALT deductions essentially screw over those of us who live in states with no income tax.
Texas has no income tax, but high property taxes.
Posted on 6/2/26 at 7:12 pm to TheMagicMan
I love the salt tax deduction. I was able to deduct around 25k in Texas for 2025 between property taxes and sales tax.
This post was edited on 6/2/26 at 7:24 pm
Posted on 6/2/26 at 7:24 pm to TheMagicMan
i'm going to go slow here jethro so you can understand it the deductibility of state income taxes is grounded in the supreme court decision of marbury v. madison it's the same reason you don't have to pay federal income taxes on state issued government bonds.
are you some kind of an imbecile? these are things you learn in college.
are you some kind of an imbecile? these are things you learn in college.
Posted on 6/2/26 at 7:33 pm to TheMagicMan
You are allowed to deduct the larger of your actual state income tax or a calculated estimate of sales tax as an itemized deduction. The deduction is also capped at $10k, which the blue states hate.
The standard deduction is so high now that simply having a mortgage no longer almost guarantees a taxpayer has enough to itemize.
In Louisiana the income tax deduction is usually more than the sales tax deduction unless you bought a new car or something that you are allowed to add on top of the estimate.
The standard deduction is so high now that simply having a mortgage no longer almost guarantees a taxpayer has enough to itemize.
In Louisiana the income tax deduction is usually more than the sales tax deduction unless you bought a new car or something that you are allowed to add on top of the estimate.
Posted on 6/2/26 at 7:35 pm to TheMagicMan
We have well over $100,000 in potential SALT deductions but our MAGI is high enough we only have $10k left after the TCJA passed. Except for ~$4k in property tax in Colorado everything else comes from a red state. I should be highly agrieved... and I am. ETA the reason for this is to show that people that had large SALT deduction prior to TCJA and even under the current modification still have very low SALT deductions. The difference now between blue and red states is much lower than it was before.
As for your situation, Florida, despite having no income tax, you can deduct all state and local sales taxes you pay. You have to elect one or the other. Most people don't keep up with it, but in a year you buy a car or other high-value item(s) it can be useful.
As for your situation, Florida, despite having no income tax, you can deduct all state and local sales taxes you pay. You have to elect one or the other. Most people don't keep up with it, but in a year you buy a car or other high-value item(s) it can be useful.
This post was edited on 6/2/26 at 7:45 pm
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