The Local Infrastructure Tax Cuts Act modifies federal tax deductions for state and local taxes (SALT) and creates a new deduction for special assessment taxes used to fund local infrastructure projects. The bill raises the SALT deduction cap from the current limit to $10,000 for most taxpayers and $5,000 for those filing separately, though taxpayers above certain income thresholds ($215,000 for joint filers, $161,250 for head of household, and $107,500 for others) receive no deduction. Additionally, the bill allows homeowners to deduct special assessment taxes paid on their primary residences when those taxes fund community infrastructure like roads, utilities, schools, hospitals, or emergency services. Both provisions take effect for tax years beginning after December 31, 2026, with the deduction amounts adjusted annually for inflation after 2027.
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