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On April 26, the Trump administration released a document that contained a roadmap of sorts for an overhaul of the federal tax code.

His proposals included a consolidation of the current individual income tax brackets going up to 39.6 percent to three brackets, namely 10 percent, 25 percent and 35 percent. The standard deduction would be doubled, to $12,700 for single filers and $25,400 for married filing jointly.

Business income would be taxed at a maximum rate of 15 percent. The Alternative Minimum Tax and the 3.8 percent Social Security tax on net investment income would be axed. And most of the deductions we now know would be eliminated, leaving individuals able to write off only mortgage interest, charitable contributions and some child care expenses.

This all sounds well and good to ease the tax burden, but a very popular deduction proposed for elimination is the one for state and local taxes. Under current law, an individual may deduct either state individual income taxes or general sales taxes, but not both, and may also deduct any real or personal property taxes.

The deduction has two major limits. First, there is a provision called the Pease Limitation that eats away at itemized deductions for higher income taxpayers. Second,��there is the AMT, which becomes a factor because state and local taxes are “tax preferences” taxable under the AMT, so taxpayers who have large deductions for state and local taxes may have liability under AMT and would need to pay back a good portion of the benefit they thought they were getting from the state tax deduction.

Nationwide, wealthier taxpayers benefit the most from the deduction. More than 88 percent of its benefits go to Americans who earn more than $100,000 a year,��according to the . About 28 percent of tax filers claim the state and local deduction each year. Of those, 77 percent deduct income taxes and the rest deduct sales taxes.

The state and local tax deduction is more significant in states where taxes and incomes are high. In New York and California, the Tax Foundation study shows that the state and local tax deduction represents 9.1 percent and 7.9 percent of federal adjusted gross income. Here in Hawaii, the deduction represents 4.5 percent of AGI, which places us at the median of states.

Although our tax rate is above the national average, only 29 percent of Hawaii filers itemize deductions, meaning that 71 percent derive no benefit from specific deductions. Because the Trump plan significantly boosts the standard deduction, fewer people will need to itemize. That would increase the percentage of Hawaii taxpayers deriving no benefit from the state and local tax deduction. These taxpayers, which represents most of the population, would not be hurt if the deduction is eliminated.

�ճ����other, wealthier taxpayers would have exposure if the deduction is eliminated, but may ultimately pay less tax because of the lower tax rates contained in the Trump plan.

Hawaii income tax follows federal law for the most part, but there are two major differences: Hawaii doesn’t have an AMT, and Hawaii does not allow a deduction for state taxes for individuals making more than $100,000 (single), $150,000 (head of household), or $200,000 (joint) in federal adjusted gross income.

The more affluent taxpayers for whom the deduction is disallowed anyway would not be affected by Hawaii adopting this part of the Trump plan, nor would the taxpayers on the other end of the spectrum who take the standard deduction (although Hawaii’s standard deduction is much lower than the federal one). Any impact from adopting this part of the Trump plan would fall most heavily on those in the middle. Ouch!

Look forward to more as the Trump tax plan starts to take shape.