Sponsors (4)
The bill preserves partial SALT relief for many taxpayers and makes certain local infrastructure assessments more tax‑favored, but it reduces federal revenue, creates sharp eligibility cliffs and uneven benefits that can shift costs onto nonbeneficiaries and some homeowners.
Middle-income taxpayers (non‑married and married filing jointly under the income thresholds, and married filing separately up to a $5,000 cap) keep a partial SALT deduction (up to $10,000 or $5,000), preserving tax relief for many households.
Homeowners in special-assessment districts can deduct special‑assessment taxes on their principal residence, lowering taxable income and reducing the after‑tax cost of local infrastructure assessments.
Local governments and not‑for‑profit, member‑owned utilities gain greater funding flexibility for water, sewer, telecom, and public safety projects because assessments become more tax‑favored.
Making more assessments and deductions tax‑favored reduces federal revenue, which could increase deficits or force cuts or offsets elsewhere in the budget.
Households with income just above the bill's thresholds can face sharp 'cliff' losses of deductions (e.g., dropping from a $10,000 deduction to $0), producing abrupt tax increases from modest income differences.
Taxpayers with incomes above the thresholds lose the SALT deduction entirely, increasing federal tax liability for higher‑earners.
Based on analysis of 3 sections of legislative text.
Introduced February 12, 2026 by Haley Stevens · Last progress February 12, 2026
Creates income-tiered limits on the federal deduction for state and local taxes (SALT) and adds a new, limited federal deduction for certain special-assessment taxes on a taxpayer’s principal residence when those assessments fund community infrastructure that directly benefits the property. The SALT change sets no deduction for taxpayers above specified income thresholds, a $5,000 cap for married filing separately, and a $10,000 cap for other filers, with inflation adjustments beginning after 2027. The special-assessment deduction applies to assessments imposed by states, localities, U.S. possessions, or the District of Columbia for projects such as roads, utilities, schools, hospitals, emergency services, and dam restoration, limited to the taxpayer’s principal residence. Both changes apply to tax years beginning after December 31, 2026.