You are probably watching closely as the “big beautiful bill” works its way through Congress and the Senate toward President Donald Trump’s desk. Among the priorities for the budget listed by the Trump administration back in February were:
- No tax on tips
- No tax on seniors’ Social Security
- No tax on overtime pay
- Renewing the Trump Tax Cuts
- Adjusting the SALT cap
- Eliminating special tax breaks for billionaire sports team owners
- Closing the carried interest loophole
- Tax cuts for Made in America projects
A couple of those could impact retirees significantly. No tax on Social Security at the federal level will be an obvious win for retirees, but for many retirees in high tax states, an adjustment to the state and local tax deduction cap could be significant as well.
After signing the SALT cap into law to balance his 2017 tax reform, President Trump signaled in September of 2024 that he would turn that policy around and get rid of the cap if he won the White House back. He posted on Truth Social in September 2024, “I will turn it around, get SALT back, lower your Taxes, and so much more.
The House has released its bill proposal and it appears the cap will be lifted, but maybe not by as much as some Republican House members had hoped. The Hill’s Mychael Schnell and Tobias Burns report:
In one of the most long-awaited details, the legislation increases the state and local tax (SALT) deduction cap from $10,000 to $30,000 for single and joint filers — which would phase down as income grows — a figure lower than the proposal floated by key stakeholders.
Shortly before the release of the tax bill, a group of Republican moderates from high-tax blue states told leadership they would be content with a SALT deduction cap of $62,000 for single filers and $124,000 for joint filers. The proposition came after the same group rejected an offer from leadership last week to increase the SALT deduction cap to $30,000.
In the midst of the discussion over the cap, Joseph Johns of the Tax Foundation has released a breakdown of the state and local tax collections per capita by state for 2025. He writes:
According to the latest economic data from the US Census Bureau (for FY 2022), the average per capita state and local tax burden was $7,109. However, collections vary widely by state, reflecting differences in tax rates and bases, natural resource endowments, the scale and scope of taxable economic activity in each state, and residents’ political preferences.
The District of Columbia again ranks above any state tax revenue per capita, with a total tax burden of $14,574. This is largely due to the mandatory upkeep of federal government property in the District of Columbia. New York residents experienced the second highest combined state and local per capita tax burden at $12,685. California ($10,319) also remains near the top of the list, joined by Connecticut ($9,718) and Hawaii ($9,503). Three southern states bring up the rear: Alabama ($4,722), Tennessee ($4,731), and Mississippi ($4,767). Alaska ($6,915) and North Dakota ($8,961) also continued to be statistical outliers due to their rich natural resource endowments and the proportionate severance tax revenue associated with mineral extraction taxes.
The Tax Foundation’s map below shows you where your state falls among per capita tax collections.
As you can see on the map, where you live can make a big difference in how much you’re paying to your state and local governments. The question is, are you getting a good return on your money? Many of the areas with the highest per capita taxation are also home to big blue blob cities where politicians have allowed criminals and drug addicts to take over the streets, used precious tax dollars to fund their own progressive political agendas, and allowed infrastructure to crumble around their hard working citizens.
Action Line: If you’re tired of politicians who treat you like a piggy bank and give nothing back, maybe it’s time to look for a better America. Begin your search with Your Survival Guy’s 2025 Super States. When you need a guide on your retirement journey, email me at ejsmith@yoursurvivalguy.com. And pick up a map for the road ahead by clicking here to subscribe to my free monthly Survive & Thrive letter.
