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Congress·In Committee

Congress Proposes New Tax Deductions for Local Infrastructure While Cutting SALT Breaks for Higher Earners

Local Infrastructure Tax Cuts Act

23 days ago·View on Congress.gov

Legislative Progress

✓ Filed
Review
House
Senate
President

Key Points

  • This bill would let homeowners deduct 'special assessment' taxes from their federal income taxes. These are extra fees local governments sometimes charge property owners to pay for specific local projects like new roads, schools, water systems, or fixing dams.
  • To get this tax break, the infrastructure project must be owned by a government or a non-profit utility. The deduction only applies to your main home, not a vacation home or a business property.
  • The bill changes who can use the State and Local Tax (SALT) deduction. Currently, many people can deduct up to $10,000 of these taxes. Under this plan, that deduction would drop to $0 for higher earners, such as married couples making over $215,000 or individuals making over $107,500.
  • For families making less than those amounts, the $10,000 deduction limit stays the same. These income limits and deduction amounts would also be adjusted for inflation every year starting in 2027 so the rules keep up with the cost of living.
  • If Congress passes this bill, the new rules would start for the 2027 tax year. The goal is to make it more affordable for neighborhoods to fund local improvements while limiting tax breaks for those with higher incomes.
TaxesInfrastructure TransportationHousing

Impact Analysis

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

State Impacts

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Feb 12, 2026House

Referred to the House Committee on Ways and Means.

Feb 12, 2026

Introduced in House

What Happens Next

Projected impacts based on AI analysis

2027-01-01

New tax rules take effect for the 2027 tax year

If passed, homeowners could start claiming the special assessment deduction and higher earners would lose SALT deductions beginning with taxes filed in early 2028 for the 2027 tax year.

2028-01-01

Inflation adjustments begin for income thresholds and deduction amounts

Starting in 2028, the income limits that determine who keeps SALT deductions and the deduction cap amounts would automatically adjust upward with inflation, so the rules don't get harsher over time just because prices rise.

Source Information

Document Type

Congressional Bill

Official Title

Local Infrastructure Tax Cuts Act

Bill NumberHR 7561
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Cosponsors

(3)
D: 3

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.