WASHINGTON—High-income coastal professionals look likely to emerge as significant winners from the Democrats’ proposed tax agenda, escaping rate increases and regaining a deduction for state and local taxes that was capped at $10,000 in 2017.

The potential result: Many residents of New York, New Jersey, California and other states who make more than the $400,000 threshold that President Biden set for tax increases could end up with tax cuts atop the tax cuts they got four years ago.

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WASHINGTON—High-income coastal professionals look likely to emerge as significant winners from the Democrats’ proposed tax agenda, escaping rate increases and regaining a deduction for state and local taxes that was capped at $10,000 in 2017.

The potential result: Many residents of New York, New Jersey, California and other states who make more than the $400,000 threshold that President Biden set for tax increases could end up with tax cuts atop the tax cuts they got four years ago.

“The combination of keeping the low tax rate and being able to fully deduct state and local taxes gives these families an even bigger benefit than even the 2017 tax writers intended,” said Brian Riedl, a former Senate Republican aide who is a senior fellow at the Manhattan Institute, a conservative think tank.

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The details aren’t final yet, and lawmakers still need to vote on this as part of the Biden administration’s broader healthcare, education and climate-change agenda. The break wasn’t in the framework that the president released Thursday, but Democratic lawmakers said they expect changes to the cap to be added before a final vote.

Democrats haven’t settled on a plan, but one option would repeal the cap for 2022 and 2023 and reinstate it in 2026 and 2027. In those first two years, that repeal could outweigh all of the tax increases on high-income people, according to the Committee for a Responsible Federal Budget, which has criticized plans to remove the cap.

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On top of potential changes to the deduction, Sen. Kyrsten Sinema (D., Ariz.) objected to the individual tax-rate increases in the House Democrats’ tax plan, which would have raised the top marginal tax rate to 39.6% from 37% for taxable income above $400,000 for individuals and $450,000 for married couples. That would have offset some of the benefit of changing the deduction. Instead, individual tax-rate increases don’t start until income reaches $10 million under the White House framework.

Allowing a bigger state and local tax deduction wouldn’t necessarily violate any of the president’s red lines regarding taxing households below $400,000 in income, and the plan as a whole would still raise money from corporations and wealthy individuals who should be paying more, a senior White House official said.

The households in high-tax states stand to benefit from the combination of policies that are necessary to get any tax plan through Congress with Republicans united in opposition and Democrats holding narrow majorities.

New York Democratic Rep. Tom Suozzi is one of the leaders of the push to repeal the SALT cap.

Photo: Sarah Silbiger/Bloomberg News

Republicans say the deduction provides an unfair federal subsidy to state governments, which is why they capped it at $10,000 four years ago. And many progressive Democrats and tax experts oppose restoring the deduction because the bulk of the benefits go to the richest Americans, exactly the people that Democrats say they don’t want to help.

“It’s going to be a more fair tax system, I don’t have any doubt. It’s not going to be as fair as it should be,” said Sen. Sherrod Brown

(D., Ohio). “We’ve got 50 Republicans resisting anything.”

Democratic representatives from high-tax states including Tom Suozzi (D., N.Y.), Bill Pascrell (D., N.J.) and Josh Gottheimer (D., N.J.) have repeatedly insisted on changing the cap on the state and local tax deduction, or SALT, that was set in the 2017 Republican tax law.

Most residents of those states got net tax cuts from the 2017 tax law because of other provisions. But residents of high-tax states saw the $10,000 cap as an attack on them by congressional Republicans and the Trump administration. Repeal has become a rallying cry, and opposition to it helped Democrats flip several GOP House seats in 2018.

While most of the direct benefit of repealing the cap would go to the top 1% of households, Democrats argue that the cap really hurts state and local governments. The argument is that it makes it hard for states to tax their high-income residents to provide public services because the full burden falls on the residents instead of being partially offset by the federal provision. The top marginal income-tax rates for New York, New Jersey and California all exceed 10%.

“No SALT, no deal. I’m pushing for full repeal,” Mr. Suozzi said this week. “I’m confident we’ll get something done.”

Mr. Pascrell said: “Tax fairness demands restoration of the SALT deduction in line with President Biden’s promise not to raise taxes on the middle class.”

The resulting state and local tax deduction would actually be more generous than it was before the 2017 tax law. Back then, the alternative minimum tax limited how much benefit people could get from the deduction. But the 2017 law loosened that tax, and Democrats aren’t planning to bring it back.

For example, consider a married couple making $500,000 in wages with two children, a $22,000 property-tax bill and $40,000 in state income taxes. They would owe about $112,000 in federal taxes under the law before the Republican tax cut, more than $97,000 under current law and less than $86,000 under a version that removes the deduction cap and doesn’t touch tax rates, according to an example constructed by Kyle Pomerleau

of the conservative-leaning American Enterprise Institute.

Write to Richard Rubin at richard.rubin@wsj.com