Republicans’ OBBB Act Tax Reform Triggers Near Doubling of Itemizers Through SALT Expansion

CBO projects U.S. tax itemizers will double due to SALT cap increases and new deductions for tips and overtime under the OBBB Act. Analyzed by AXL News.

By: AXL Media

Published: Feb 24, 2026, 3:36 AM EST

Source: Information for this report was sourced from Politico

The Regulatory Shift Toward Tax Code Complexity

The Congressional Budget Office (CBO) recently provided a stark illustration of how the Republican led "One Big Beautiful Bill Act" (OBBB Act) is reshaping the American tax landscape. According to the latest projections, the number of taxpayers who choose to itemize their returns is expected to almost double by the year 2029. This development represents a significant strategic pivot from previous tax simplification efforts. In the past, the Tax Cuts and Jobs Act (TCJA) successfully reduced itemizers from one in three taxpayers to less than one in ten by aggressively expanding the standard deduction. However, current data suggests that by 2029, approximately one in six taxpayers will return to itemizing, a move that adds significant administrative layers to the federal filing process.

The Political Bargain of SALT Cap Expansion

The primary driver behind this sudden spike in itemization is the tactical adjustment of the State and Local Tax (SALT) deduction cap. To secure the necessary votes from a small contingent of blue state Republicans, lawmakers were forced to raise the SALT cap from 10,000 dollars to 40,000 dollars. This policy change specifically benefits high income earners in districts with high local taxes, effectively incentivizing millions of households to move away from the standard deduction. While the GOP further boosted the standard deduction last year, the sheer weight of the 40,000 dollar SALT ceiling outweighs those gains for many taxpayers. This shift carries heavy political weight, as a larger population of itemizers makes it more difficult for future legislatures to target these deductions for revenue increases.

Strategic Rationale and the Maze of New Deductions

Beyond the SALT expansion, the OBBB Act introduced targeted incentives for tipped income, overtime pay, and car loan interest. These measures were designed to bolster household incomes ahead of the 2026 midterms, yet they have introduced a complex regulatory maze for the average filer. For the first time, taxpayers are navigating a restrictive set of rules to claim these specific write offs. Analysts observe that while the "no tax on tips" and "no tax on overtime" policies have garnered early popularity among the electorate, they create an uneven playing field. By favoring specific types of labor income over others, the code now...