Sponsors (4)
The bill preserves limited SALT relief for lower- and middle-income filers and makes special-assessment payments tax-deductible to help finance local infrastructure, but it shifts benefits unevenly (excluding renters and some filers), removes SALT relief for higher earners in many cases, and reduces federal revenue with potential downstream fiscal consequences.
Many taxpayers with modified AGI at or below the bill's thresholds (especially lower- and middle-income filers) retain a limited SALT deduction ($5,000 or $10,000), and the thresholds will be inflation-adjusted after 2027 to preserve that benefit over time.
Homeowners may deduct qualified special assessment taxes paid on their principal residence, which reduces taxable income for those homeowners and makes special-assessment financing more tax-favorable.
Local governments, not-for-profit member-owned utilities, and other local entities can more easily finance public infrastructure projects (roads, schools, water, utilities, dam restoration) through special assessment districts when residents receive tax relief for those assessments.
The new deduction for qualified special assessments reduces federal tax revenue, which could increase the deficit or require future spending cuts or tax increases that affect all taxpayers.
Renters and households that do not itemize (including many lower-income households) receive no benefit from the special-assessment deduction, creating unequal tax relief across households.
Higher-income taxpayers (those above the bill's AGI thresholds) would lose any SALT deduction benefit under the bill (applicable limitation amount $0), increasing their tax liability compared with current law.
Based on analysis of 3 sections of legislative text.
Allows a federal deduction for certain special-assessment taxes on a principal residence and revises SALT deduction limits and income phaseouts, effective after 2026.
Introduced February 12, 2026 by Haley Stevens · Last progress February 12, 2026
Creates a new federal tax deduction for certain “qualified special assessment” taxes paid on a taxpayer’s principal residence and revises the federal limit on state and local tax (SALT) deductions. It defines which special-assessment taxes and local infrastructure projects qualify, limits the deduction to a taxpayer’s principal residence, and changes SALT deduction phaseouts and income thresholds, with the rules effective for taxable years beginning after December 31, 2026 and inflation indexing beginning after 2027.