SALT Act

I 117TH CONGRESS 1ST SESSION H. R. 946 To amend the Internal Revenue Code of 1986 to repeal the dollar limitation on deduction of State and local taxes, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 8, 2021 Mr. PASCRELL (for himself, Mrs. WATSON COLEMAN, Mr. PALLONE, Mr. SIRES, Mr. PAYNE, Mr. NORCROSS, Ms. SHERRILL, Mr. KIM of New Jer- sey, Mr. COURTNEY, and Mr. PANETTA) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to repeal the dollar limitation on deduction of State and local taxes, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop the Attack on 4 Local Taxpayers Act of 2021’’ or the ‘‘SALT Act’’. 5 SEC. 2. REPEAL OF DOLLAR LIMITATION ON DEDUCTION 6 FOR STATE AND LOCAL TAXES. 7 (a) IN GENERAL.—Section 164(b)(6) of the Internal 8 Revenue Code of 1986 is amended by striking all that fol- 9 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 946 IH lows ‘‘January 1, 2026’’ and inserting ‘‘, foreign real prop- 1 erty taxes (other than such taxes paid or accrued in car- 2 rying on a trade or business or an activity described in 3 section 212) shall not be taken into account under sub- 4 section (a)(1).’’. 5 (b) EFFECTIVE DATE.—The amendment made by 6 this section shall apply to taxable years beginning after 7 December 31, 2017. 8 SEC. 3. INCREASE IN DEDUCTION FOR CERTAIN EXPENSES 9 OF ELEMENTARY AND SECONDARY SCHOOL 10 TEACHERS. 11 (a) INCREASE.—Section 62(a)(2)(D) of the Internal 12 Revenue Code of 1986 is amended by striking ‘‘$250’’ and 13 inserting ‘‘$1,000’’. 14 (b) CONFORMING AMENDMENTS.—Section 62(d)(3) 15 of the Internal Revenue Code of 1986 is amended— 16 (1) by striking ‘‘2015’’ and inserting ‘‘2019’’; 17 (2) by striking ‘‘$250’’ and inserting ‘‘$1,000’’; 18 and 19 (3) in subparagraph (B), by striking ‘‘2014’’ 20 and inserting ‘‘2018’’. 21 (c) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to taxable years beginning after 23 December 31, 2017. 24 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 946 IH SEC. 4. ABOVE-THE-LINE DEDUCTION ALLOWED FOR CER- 1 TAIN EXPENSES OF FIRST RESPONDERS. 2 (a) IN GENERAL.—Section 62(a)(2) of the Internal 3 Revenue Code of 1986 is amended by adding at the end 4 the following new subparagraph: 5 ‘‘(F) CERTAIN EXPENSES OF FIRST RE- 6 SPONDERS.—The deductions allowed by section 7 162 which consist of expenses, not in excess of 8 $1,000, paid or incurred by a first responder— 9 ‘‘(i) as tuition or fees for the partici- 10 pation of the first responder in profes- 11 sional development courses related to serv- 12 ice as a first responder; or 13 ‘‘(ii) for uniforms used by the first re- 14 sponder in service as a first responder.’’. 15 (b) FIRST RESPONDER DEFINED.—Section 62(d) of 16 the Internal Revenue Code of 1986 is amended by adding 17 at the end the following new paragraph: 18 ‘‘(4) FIRST RESPONDER.—For purposes of sub- 19 section (a)(2)(F), the term ‘first responder’ means, 20 with respect to any taxable year, any individual who 21 is employed as a law enforcement officer, firefighter, 22 paramedic, or emergency medical technician for at 23 least 1,000 hours during such taxable year.’’. 24 (c) INFLATION ADJUSTMENT.—Section 62(d)(3) of 25 the Internal Revenue Code of 1986, as amended by section 26 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 946 IH 4, is further amended by striking ‘‘the $1,000 amount in 1 subsection (a)(2)(D)’’ and inserting ‘‘the $1,000 amount 2 in each of subparagraphs (D) and (F) of subsection 3 (a)(2)’’. 4 (d) EFFECTIVE DATE.—The amendments made by 5 this section shall apply to taxable years beginning after 6 December 31, 2017. 7 SEC. 5. INCREASE OF TOP MARGINAL INDIVIDUAL INCOME 8 TAX RATE UNDER TEMPORARY RULES. 9 (a) IN GENERAL.—The tables contained in subpara- 10 graphs (A), (B), (C), (D), and (E) of section 1(j)(2) of 11 the Internal Revenue Code of 1986 are each amended by 12 striking ‘‘37%’’ and inserting ‘‘39.6%’’ and— 13 (1) in subparagraph (A)— 14 (A) by striking ‘‘$600,000’’ each place 15 such term appears and inserting ‘‘$479,000’’; 16 and 17 (B) by striking ‘‘$161,379’’ and inserting 18 ‘‘$119,029’’; 19 (2) in subparagraph (B)— 20 (A) by striking ‘‘$500,000’’ each place 21 such term appears and inserting ‘‘$452,400’’; 22 and 23 (B) by striking ‘‘$149,298’’ and inserting 24 ‘‘$132,638’’; 25 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 946 IH (3) in subparagraph (C)— 1 (A) by striking ‘‘$500,000’’ each place 2 such term appears and inserting ‘‘$425,800’’; 3 and 4 (B) by striking ‘‘$150,689.50’’ and insert- 5 ing ‘‘$124,719.50’’; and 6 (4) in subparagraph (D)— 7 (A) by striking ‘‘$300,000’’ each place 8 such term appears and inserting ‘‘$239,500’’; 9 and 10 (B) by striking ‘‘$80,689.50’’ and insert- 11 ing ‘‘$59,514.50’’. 12 (b) CONFORMING AMENDMENTS.— 13 (1) Section 1(j)(4)(B)(iii) of the Internal Rev- 14 enue Code of 1986 is amended— 15 (A) in the matter preceding subclause (I), 16 by striking ‘‘37 percent’’ and inserting ‘‘39.6 17 percent’’; 18 (B) in subclause (II), by striking ‘‘37-per- 19 cent bracket’’ and inserting ‘‘39.6-percent 20 bracket’’; and 21 (C) in the heading, by striking ‘‘37-PER- 22 CENT BRACKET’’ and inserting ‘‘39.6-PERCENT 23 BRACKET’’. 24 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 946 IH (2) Section 1(j)(4)(C) of such Code is amend- 1 ed— 2 (A) in clause (i)(II), by striking ‘‘para- 3 graph (5)(B)(i)(IV)’’ and inserting ‘‘paragraph 4 (5)(B)(iv)’’; and 5 (B) by amending clause (ii) to read as fol- 6 lows: 7 ‘‘(ii) the amount which would (without 8 regard to this paragraph) be taxed at a 9 rate below 39.6 percent shall not be more 10 than the sum of— 11 ‘‘(I) the earned taxable income of 12 such child, plus 13 ‘‘(II) the maximum dollar 14 amount for the 35-percent rate brack- 15 et for estates and trusts.’’. 16 (3) The heading of section 1(j)(5) of such Code 17 is amended to read as follows: ‘‘APPLICATION OF 18 ZERO PERCENT CAPITAL GAIN RATE BRACKETS’’. 19 (4) Subparagraphs (A) and (B) of section 20 1(j)(5) of such Code are amended to read as follows: 21 ‘‘(A) IN GENERAL.—Subsection 22 (h)(1)(B)(i) shall be applied by substituting 23 ‘below the maximum zero rate amount’ for 24 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 946 IH ‘which would (without regard to this paragraph) 1 be taxed at a rate below 25 percent’. 2 ‘‘(B) MAXIMUM ZERO RATE AMOUNT DE- 3 FINED.—For purposes of subparagraph (A), the 4 term ‘maximum zero rate amount’ means— 5 ‘‘(i) in the case of a joint return or 6 surviving spouse, $77,200; 7 ‘‘(ii) in the case of an individual who 8 is a head of household (as defined in sec- 9 tion 2(b)), $51,700; 10 ‘‘(iii) in the case of any other indi- 11 vidual (other than an estate or trust), an 12 amount equal to 1⁄2 of the amount in effect 13 for the taxable year under clause (i); and 14 ‘‘(iv) in the case of an estate or trust, 15 $2,600.’’. 16 (5) Section 1(j)(5)(C) of such Code is amended 17 by striking ‘‘clauses (i) and (ii) of’’. 18 (c) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to taxable years beginning after 20 December 31, 2020. 21 (d) SECTION 15 NOT TO APPLY.—Section 15 of the 22 Internal Revenue Code of 1986 shall not apply to any 23 VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 946 IH change in a rate of tax by reason of any amendment made 1 by this section. 2 Æ VerDate Sep 11 2014 22:21 Mar 05, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H946.IH H946 kjohnson on DSK79L0C42PROD with BILLS