JCT Describes SALT Deduction Bill Substitute Amendment

DESCRIPTION OF THE CHAIRMAN'S AMENDMENT IN THE
NATURE OF A SUBSTITUTE TO THE PROVISIONS OF H.R. ___,
THE “RESTORING TAX FAIRNESS FOR STATES AND LOCALITIES ACT”

JOINT COMMITTEE ON TAXATION
December 10, 2019
JCX-53-19

The Chairman's amendment in the nature of a substitute provides an enhanced above-the-line deduction for teachers and first responders.

Present Law

Although business expenses of employees are generally not allowed in computing adjusted gross income,¹ certain employee business expenses are so allowed (referred to as “above-the-line” deductions).² These include certain expenses of qualified performing artists, expenses of State or local government officials performing services on a fee basis, expenses of eligible educators, and expenses of members of a reserve component of the Armed Forces.³ Eligible educators are individuals who are elementary or secondary school teachers, instructors, counselors, principals, or aides in a school for at least 900 hours during a school year.⁴

An eligible educator may take an above-the-line deduction for ordinary and necessary expenses incurred (1) by reason of participation in professional development courses related to the curriculum or students the educator teaches, or (2) in connection with books, supplies, computer and other equipment, and supplementary materials to be used in the classroom.⁵ The deduction may not exceed $250 (for 2019). This dollar amount is indexed for inflation.

Description of Proposal

The proposal increases the maximum dollar amount of the deduction for certain expenses of eligible educators to $500. This dollar amount is indexed for inflation.⁶

The proposal also adds an above-the-line deduction for certain expenses of first responders. First responders are individuals who are employed as law enforcement officers, firefighters, paramedics, or emergency medical technicians for at least 1,000 hours during the taxable year.

A first responder may take an above-the-line deduction for expenses incurred (1) as tuition or fees for the participation in professional development courses related to service as a first responder, or (2) in connection with uniforms personally used in service as a first responder. The maximum dollar amount for the above-the-line deduction is $500. This dollar amount is indexed for inflation.⁷

Effective Date

The proposal to increase the maximum deduction for certain expenses of eligible educators is effective for taxable years beginning after December 31, 2018.

The proposal to add an above-the-line deduction for certain expenses of first responders is effective for taxable years beginning after December 31, 2019.

Revenue Effects

The following presents the estimated Federal fiscal year budget effects of the Chairman's amendment in the nature of a substitute relative to the present-law baseline: