Some business owners avoid paying higher taxes by exploiting legal gaps in the $10,000 cap on state and local tax deductions, otherwise known as the SALT cap. The tricky part is that these workarounds are available only to business owners who report their profits on their personal tax returns. As per a Wall Street Journal analysis, regular workers, small business owners, and property owners don't have this option and are subject to the cap's rules. By using these state-approved strategies, they can lower their federal tax bills. Though some argue that these workarounds make the tax system fairer, critics say the cap contributes to federal tax losses while hurting the ones making the least.

Source: Wall Street Journal August 28, 2023 01:15 UTC