The tax reform laws enacted in late 2017 have finally been put to the test, and most taxpayers have either already seen or have a good idea of what impact they'll have on their individual tax returns. Yet among all the changes that tax reform brought about, lawmakers continue to wrangle with one part of the legislation: the $10,000 limitation on itemized deductions for state and local taxes.

But even though lawmakers in high-tax states continue to fight for further changes to the new limitation, there's an aspect of the debate that has largely gone unnoticed. Even though the new limit has indeed caused millions of taxpayers to claim less in itemized deductions than they did under previous law, other tax law changes affecting the alternative minimum tax will be a substantial offset -- and recent research suggests that in many cases, even those subject to the SALT deduction limitation are reaping net savings from the tax law changes.

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What Bloomberg found

Financial analysts at Bloomberg recently released their analysis of tax returns in past years to see what net impact the SALT deduction limits would have on taxpayers. The research found that about three-quarters of those who paid more than $10,000 in state and local taxes annually -- and therefore would likely be subject to the new limits for 2018 -- also had to pay alternative minimum tax.

That might not seem like a related issue, but it's important because of the way that alternative minimum tax gets calculated. Unlike the regular tax laws, the rules for the AMT have never allowed taxpayers to deduct any of their state and local tax liability. At the time that the AMT came into existence in the early 1980s, deductions like the SALT provisions played a vital role for many wealthy taxpayers in minimizing overall tax, and lawmakers wanted to take efforts to ensure that no matter how many tax breaks people qualified to take, they would still have to pay at least some minimum amount of tax on their income.

How AMT revisions affect the SALT debate

At one point during the fight for tax reform, Congress looked seriously at fully repealing the AMT. Cost concerns about the overall tax law package made that impractical, but what instead got passed was a more complicated set of new rules that largely achieved the same end goal. First, the new laws dramatically boosted the exemption amounts under the AMT, making fewer people have to worry about the tax at all.

More important for wealthier taxpayers was the change to the income limits at which that exemption amount started to phase out. Under previous law, exemptions started to disappear at income levels as low as around $120,000 for single filers and $160,000 for joint filers. Now, no phaseout occurs until income reaches $500,000 or $1 million for single and joint filers, respectively.

Estimates suggest that as a result of these changes, only about 200,000 taxpayers are likely to pay AMT for the 2018 tax year. That's down from more than 5 million who were typically subject to the tax under previous law.

A word of warning about the analysis

Bloomberg's way of casting the problem is reasonable, but it is subject to one criticism: Just because someone was subject to the AMT doesn't mean that they got no benefit from state and local tax deductions. It's true that for AMT purposes, no deduction for state and local tax payments was allowed. But the way the AMT works involves comparing liability under its alternate tax scheme with tax liability under the regular tax rules. Taxpayers end up paying whichever tax is greater.

So, if you take away a deduction in the regular tax rules, it can push your regular tax liability above what you owe under the AMT rules, boosting your total tax bill. In effect, you do get a deduction for state and local taxes -- even if you were subject to the AMT.

It's unclear from the analysis how many of those former AMT-paying taxpayers are in that category. But what is clear is that every individual situation is different, and what affects one taxpayer favorably might hit another one's taxes unfavorably.

Those in high-tax states will continue to fight against the SALT deduction limits, because under the new AMT rules, they have even more to gain from any upward allowance in their itemized deductions. But behind the scenes, you should keep in mind that many of those making these arguments have already seen big benefits from tax reform's other provisions.