Republican Tax Reform Projected to Nearly Double Number of Itemizing Taxpayers by 2029

A CBO report reveals that the One Big Beautiful Bill Act increases tax complexity, with itemizers expected to double due to a higher SALT deduction cap in 2029.

By: AXL Media

Published: Feb 23, 2026, 11:07 AM EST

Source: Information for this report was sourced from POLITICO

The Shift Toward Increased Tax Complexity

The Congressional Budget Office (CBO) has released a new assessment illustrating how recent legislative changes have added layers of complexity to the national tax system. According to the data, the "One Big Beautiful Bill Act" is expected to cause a surge in the number of individuals who choose to itemize their tax returns rather than taking the standard deduction. While the 2017 Tax Cuts and Jobs Act reduced the number of itemizers from one in hree to less than one in ten, the latest projections suggest that approximately one in six taxpayers will be itemizing by the end of the decade.

The SALT Compromise and Blue State Influence

A central factor in this trend is the modification of the state and local tax (SALT) deduction cap. To secure the support of Republican lawmakers from high tax states, the administration agreed to raise the SALT deduction limit from $10,000 to $40,000. This policy change was a critical requirement for passing the tax package through the House. However, the increase in the cap effectively encourages more high income earners to track individual expenses. Analysts note that many of these new itemizers are located in states and districts represented by Democrats, which could alter future political strategies regarding tax revenue increases.

New Incentives for Tipped and Overtime Income

Beyond itemization, the new law introduces several targeted tax breaks that have created a maze of rules for taxpayers and professionals alike. For the first time, individuals are navigating provisions that allow for deductions on tipped income, overtime pay, and the interest on car loans. While these measures have proven popular in their initial implementation, tax experts argue they complicate the system by favoring specific types of earnings over others. There is also concern that these popular breaks could inspire a wave of copycat tax subsidies for other special interest groups in future legislative cycles.