Local Infrastructure Tax Cuts Act

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.