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Does the SALT tax deduction cap penalize women?

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2 years ago

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A key provision in next year’s looming debate over the possible extension of the Tax Cuts and Jobs Act highlights one of many examples of gender bias in taxes, according to experts.

The current SALT deduction limit of $10,000 for state and local taxes saves taxpayers between $79 billion and $118 billion per year in lower expenditures. It will play a pivotal role in the discussion about TCJA provisions set to expire after 2025 because it’s one of only a handful that lower the price of extensions projected to cost $4.6 trillion. 

Critics have referred to the limitation as a “marriage penalty” and called for raising that ceiling or eliminating it. Others reject that idea on the grounds that the deduction primarily benefits wealthy households in high-tax states such as New York and California.

READ MORE: The 12 firms with the largest percentage of women advisors

One of the “presumably unintended further consequences” of the limit has been discouraging the so-called second earners in a couple, who are often women, from working due to the higher potential taxes on combined income and restrictions on the deduction for state and local duties, said Jennifer Bird-Pollan, a law professor and the Alan S. Schenk Chair in Taxation at Wayne State University. She gave a presentation on the gender implications of the curb on the deduction this past fall at the American Tax Policy Institute‘s Gender and Tax Symposium. 

While the tax policy isn’t likely motivating people’s decisions about whether to get married or “dramatically impacting” a spouse’s decision not to get a job as the lower-earning member of the household, the restraint on the deduction amounts to “a further thumb on the scale in the same direction, without any conversation on whether it was appropriate or not,” Bird-Pollan said. The taxes enter the equation alongside other potential costs such as childcare, commuting, dry cleaning and food preparation, she pointed out in an interview.

“Those are all costs you incur if you decide to work outside the home. The salary has to be high enough so that you’re not actually worse off,” Bird-Pollan said. “The tax bill is just going to be that much higher if they’re not allowed to deduct their state taxes.”

Other areas reflecting gender bias in taxes play out in the form of “tampon taxes,” classifying menstrual products as luxury items subject to sales duties; differences in the value of Social Security benefits for women, who tend to be paid lower wages and live longer than men, as well as the rules for getting the maximum spousal payments; the treatment of paid surrogacy; and the disparate impacts of the child tax credit, the earned income tax credit and savings from capital gains, according to Bridget Crawford, the organizer of the conference as the vice president of the institute and a law professor at Pace University’s Elisabeth Haub School of Law.

READ MORE: 10 big trends in SALT for 2024 

The conference in Washington, D.C., drew about 110 attendees in person and virtually among academics, policy experts and government officials, she noted in an interview. It followed the institute’s conference two years ago about racial disparities in taxes and came before another one this March on tax law, the environment and climate change. The organization welcomes more participation and collaboration from across the tax and wealth professions, Crawford said.

“The tax system is a lens for analyzing our society’s values and choices,” she said. “It’s an excellent starting point for very important conversations that we have had and need to have and will continue to have around all sorts of justice-related concerns.”

In terms of the cap on the deduction for state and local taxes, policymakers could alter the existing policy by imposing the limit on property duties alone or simply boosting the allowable amount for married couples, Bird-Pollan said. Tweaking it or getting rid of it will likely prove difficult, though. 

Democrats don’t often push for “tax cuts for higher-income people,” and they’re in the minority in the House and the Senate anyways, she pointed out. President Donald Trump and his Republican party have the trifecta in Congress and the White House, but they will be facing a complicated challenge from the budgetary effect of extending the Tax Cuts and Jobs Act.

“It gave them some revenue, and it only hurt people in blue states, because those are the states that have those taxes,” Bird-Pollan said. “The Democrats have a little bit of a hard time arguing this. If it changes, it’s going to be because of Republican legislators from high-tax jurisdictions.”

READ MORE: Why is the pay gap for women financial advisors so wide?

She credited Crawford’s work with encouraging many states to end sales taxes on feminine hygiene products and noted that financial advisors and tax professionals can read forthcoming research from the conference in legal journals. Exploring the gender bias in taxes can often begin “when we acknowledge things like women are still paid less than men,” Bird-Pollan said.

“If that’s true, then let’s think a little bit about whether that’s a fact that we’re comfortable with or whether particular changes are making that worse or easing that a little bit,” she said. “We just need to think about where these costs fall and whether, as a society, we’re comfortable with where they fall and whether we’d like to see that changed.”

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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5 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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