Limiting state and local tax deductions to hurt 11 million taxpayers, government report shows

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U.S. Treasury Secretary Steven Mnuchin

The cap on deducting state and local taxes will prevent nearly 11 million people from deducting some $323 billion payments from their federal tax returns, according to an audit released Wednesday that shows Treasury Secretary Steven Mnuchin’s efforts to block state efforts to get around it.

The cap of $10,000 was brought in as part of the Tax Cuts and Jobs Act, and primarily impacts payers in higher-tax states in California and the Northeast.

The audit, conducted by the Treasury Inspector General for Tax Administration, is the full version of a redacted report that had been released on Tuesday.

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