Prairie State Wire

Repealing the federal cap on itemized state and local tax (SALT) deductions would save Illinois residents an average of $1,080 on their income taxes this year, according to a new study from the American Enterprise Institute (AEI).

The total reduction in federal income tax liability for Illinois residents was estimated at $3.8 billion if the SALT cap is repealed by Congress. The cap was put in place by the Tax Cuts and Jobs Act of 2017, with varying effects on taxpayers nationwide depending on state tax brackets and the level of state and local tax burdens, according to AEI. 

On average, Illinois taxpayers would see a 5.4% reduction in their federal income tax liability this year if Congress decides to repeal the SALT cap, the study concluded. 

The lion’s share of tax reductions would be confined to four states, AEI reported. Those states are California, New York, New Jersey and Illinois. In addition, 90% of the total tax reduction nationwide would go to affluent taxpayers with adjusted gross incomes of at least $200,000, the researchers found.

Nationwide, the reduction in federal income tax revenue would amount to $91.2 billion if the SALT cap is removed, according to AEI. Elected officials from the main beneficiary states are among the strongest supporters of repealing the SALT limit. 

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Effects of SALT Repeal on Taxpayers in Each State

State	% Change in Billions of Dollars	% Share of U.S. Change	Average $ Change per Taxpayer	Average % Change	% Change in Disposable Income
Alabama	-0.3%	0.3%	-$313	-2.3%	0.3%
Alaska	0.0%	0.0%	-$63	-0.4%	0.1%
Arizona	-0.8%	0.9%	-$515	-3.2%	0.5%
Arkansas	-0.3%	0.4%	-$565	-3.6%	0.6%
California	-22.9%	25.2%	-$2,192	-8.4%	1.7%
Colorado	-1.2%	1.3%	-$724	-3.7%	0.7%
Connecticut	-2.8%	3.1%	-$2,541	-8.2%	1.8%
Delaware	-0.2%	0.2%	-$633	-4.2%	0.7%
Florida	-2.7%	3.0%	-$524	-2.1%	4.0%
Georgia	-2.0%	2.2%	-$876	-4.8%	0.8%
Hawaii	-0.2%	0.3%	-$597	-4.2%	0.6%
Idaho	-0.3%	0.3%	-$668	-5.0%	0.7%
Illinois	-3.8%	4.2%	-$1,080	-5.4%	1.0%
Indiana	-0.8%	0.8%	-$458	-3.6%	0.5%
Iowa	-0.5%	0.6%	-$613	-4.9%	0.7%
Kansas	-0.4%	0.5%	-$585	-4.0%	0.6%
Kentucky	-0.6%	0.6%	-$596	-4.9%	0.7%
Louisiana	-0.4%	0.4%	-$397	-2.6%	0.4%
Maine	-0.2%	0.3%	-$644	-5.4%	0.7%
Maryland	-2.5%	2.7%	-$1,322	-6.9%	1.2%
Massachusetts	-3.8%	4.1%	-$1,662	-6.2%	1.3%
Michigan	-1.6%	1.7%	-$600	-4.0%	0.6%
Minnesota	-1.9%	2.1%	-$1,114	-6.6%	1.1%
Mississippi	-0.2%	0.2%	-$310	-2.8%	0.4%
Missouri	-1.0%	1.1%	-$665	-4.7%	0.7%
Montana	-0.2%	0.2%	-$590	-4.4%	0.6%
Nebraska	-0.4%	0.4%	-$696	-5.1%	0.7%
Nevada	-0.3%	0.3%	-$393	-2.0%	0.4%
New Hampshire	-0.2%	0.2%	-$489	-2.7%	0.5%
New Jersey	-5.8%	6.3%	-$2,090	-8.3%	1.7%
New Mexico	-0.1%	0.2%	-$308	-2.5%	0.4%
New York	-15.3%	16.8%	-$2,707	-9.2%	2.1%
North Carolina	-1.6%	1.8%	-$695	-4.5%	0.7%
North Dakota	0.0%	0.1%	-$211	-1.5%	0.2%
Ohio	-1.8%	2.0%	-$601	-4.5%	0.7%
Oklahoma	-0.3%	0.4%	-$429	-2.9%	0.4%
Oregon	-1.1%	1.3%	-$1,023	-6.5%	1.0%
Pennsylvania	-2.6%	2.9%	-$729	-4.4%	0.7%
Rhode Island	-0.3%	0.3%	-$894	-5.8%	0.9%
South Carolina	-0.6%	0.7%	-$573	-4.1%	0.6%
South Dakota	0.0%	0.0%	-$180	-1.3%	0.2%
Tennessee	-0.3%	0.3%	-$190	-1.2%	0.2%
Texas	-2.6%	2.8%	-$396	-1.8%	0.3%
Utah	-0.5%	0.5%	-$690	-4.4%	0.7%
Vermont	-0.1%	0.1%	-$684	-5.3%	0.8%
Virginia	-2.4%	2.6%	-$1,007	-5.2%	0.9%
Washington	-0.7%	0.8%	-$318	-1.5%	0.3%
West Virginia	-0.1%	0.1%	-$352	-3.4%	0.4%
Wisconsin	-1.3%	1.4%	-$754	-5.5%	0.8%
Wyoming	-0.1%	0.1%	-$392	-1.8%	0.3%

Source: American Enterprise Institute