In this report, we compare revenue equivalent alternatives to the $10,000 annual limit on the state and local tax (SALT) deduction enacted in the 2017 Tax Cuts and Jobs Act (TCJA). We consider options that would limit all itemized deductions, not just the SALT deduction, and an additional option that would raise the four highest federal individual income tax rates. Prior work has shown that higher-income households would benefit from a relaxation or repeal of the $10,000 SALT deduction limit. In this study, we find that higher-income taxpayers (those in the top income quintile) would pay the major share of any of the tax increases from the options considered, but the distribution of the tax burden within that group would vary for each option. We also find that high-tax states (those for which aggregate state and local tax deductions claimed before the TCJA were the largest fraction of aggregate state income) would pay the largest portion of any of the tax increases. The share of the tax burden for the top 10 highest-tax states would range from 60 percent with the current law $10,000 SALT deduction limit to about 45 percent for the option that would increase the top four income tax rates.
Supplemental tables with the data underlying the figures in this report are posted here.