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Research Project

Estimating the Impact of the Cap on SALT Deductions (2019), by Yonghong Wu

Research Area(s)
Government Finance Research
Tax Policy and Administration


In the report, Estimated Impact of the Cap on SALT Deductions at the Zip Code Level in Illinois, Dr. Yonghong Wu examines data from Illinois’ 2015 federal income tax filings to estimate the impact of the new $10,000 cap on federal income tax deductions for certain state and local taxes (SALT), which was approved as part of a massive federal tax reform program called the Tax Cuts and Jobs Act of 2017 (TCJA). Preliminary findings in this draft report, are: (1) approximately 15% of all Illinois tax filers (or 896,790 filers) would have been affected in 2015; (2) the estimated average reduction due to the new cap would have been 1.8% (or $2.6 billion) for filers with adjusted gross incomes (AGI) above $200,000 in 2015, and (3) tax filers who would likely see their federal income tax liability increase due to the new cap are likely to be concentrated in the AGI brackets above $100,000 and in municipalities with high property values and high local tax rates. This is a draft report, and should not be cited without express permission from Dr. Wu. Published: February 22, 2019 View the report here