About one-third of all US taxpayers would lose a popular deduction if the tax outline recently unveiled by President Trump ever goes into effect.

Treasury Secretary Steven Mnuchin, joined by National Economic Director Gary Cohn, speaks in the briefing room of the White House in Washington (AP Photo/Carolyn Kaster) More

Trump wants to slash the corporate tax rate from 35% to 15%, and reduce 7 brackets for personal-income tax to 3, simplifying the tax code. Most individual filers would face a lower federal income tax rate. But that would cut federal revenue, and to make up some of the difference, Trump has proposed killing the federal deduction for state and local taxes, known as the SALT deduction.

Laws on the books for more than a century allow workers who pay income and property tax to their city and/or state to deduct the state and local portion from the federal portion. So if you paid $1,000 in total state taxes and your gross income was $20,000, you’d be able to deduct $1,000 from your income and pay federal tax on just $19,000, at whatever federal rate applies. Essentially, that rebates a portion of the state and local taxes paid to the taxpayer.

This one deduction costs the federal government nearly $100 billion in revenue per year, making it one of the costliest “tax expenditures,” or givebacks that help people lower their tax bill. The biggest such tax break is the exclusion of employer-paid health insurance from income, which costs the government (and saves taxpayers) nearly $240 billion per year. The mortgage-interest deduction virtually all homeowners with a mortgage claim costs the government (and saves taxpayers) about $70 billion per year.

Story continues