The evolving picture of the Republicans’ proposed changes to the federal tax code does not bode well for many of Hawaii’s taxpayers, with lawmakers considering reducing or even abolishing some deductions that are particularly important to local tax filers.

Proposed new limits on the mortgage deduction would affect Hawaii more than many other places because of the state’s sky-high housing costs, while limiting or eliminating the federal income tax deduction for state and local taxes would also hit local taxpayers hard, according to Hawaii experts.

The Hawaii Association of Realtors is encouraging its members to lobby the Congress in an effort to block or amend the tax package to protect the mortgage deduction and other provisions of the tax code that benefit Hawaii taxpayers, said Myoung Oh, government affairs director for the Hawaii Realtors.

“Right now, as far as we are concerned, there will be a lot more taxes — in some cases double taxes — for some filers” in the years ahead, Oh said. There are still many unknowns about the final tax package “but we have the primer, and it’s definitely a sticker shock.”

The House version of the “Tax Cuts and Jobs Act” would end the federal tax deduction for interest paid on student loans, which would affect many college-­educated workers, while the proposal to eliminate the deduction for state and local tax payments “is definitely something that will weigh heavily as well,” Oh said.

Eliminating or limiting that state and local tax deduction, often referred to as SALT, is a critical component of the proposed federal overhaul because it would offset some of the cost of Republicans’ other plans such as reducing corporate income taxes and exempting more people from estate taxes.

Taxpayers who file itemized returns today are allowed to deduct some taxes paid to state and local governments from their gross incomes, which reduces their federal tax liabilities.

The SALT deduction is especially important in states such as Hawaii with high state and local taxes. The Tax Foundation calculates that 200,000 Hawaii tax filers used the SALT deduction in 2015 to reduce their taxable incomes by a total of $2 billion.

That allowed Hawaii filers to reduce their federal tax burden by $343 million in 2015, said Seth Colby, tax research and planning officer with the state Department of Taxation.

Most of that benefit was claimed by higher-income filers. About 95 percent of Hawaii taxpayers making more than $500,000 claimed the SALT deduction in 2015, while 19 percent of Hawaii taxpayers making less than $100,000 claimed the deduction that year, according to the Tax Foundation.

For Hawaii tax filers who earn between $80,000 and $400,000, wiping out that SALT deduction as Senate Republicans proposed last week would almost certainly cancel out any other benefits they might enjoy from the proposed federal tax overhaul, Colby said.

“It’s challenging to come up with a picture where they’re made whole,” Colby said.

The House has proposed to sharply limit the SALT deduction, but not wipe it out completely. The House draft of the bill would still allow a deduction for up to $10,000 in property taxes, but would not allow other state or local taxes to be deducted.

University of Hawaii economist Carl Bonham said the House version of the proposed tax changes would make buying a home in Hawaii even more difficult because it would cap the deduction for mortgage interest payments at $500,000. Current law caps the mortgage deduction at $1 million.

“For Hawaii, it potentially has bigger effects than the rest of the country because our home prices are so high,” Bonham said. “Capping the mortgage deduction at $500,000, for the rest of the country, it’s not that big a deal. But when your median home price is $760,000, it starts to matter. … It has the potential to affect sales and the overall Hawaii economy.”

The median price of single-family homes sold on Oahu in October was $752,000, according to the Honolulu Board of Realtors.

Existing mortgages would be “grandfathered” under the federal law, but capping new mortgages would discourage people from selling their existing homes to trade up to larger or newer properties, Bonham said.

“Those things coming together definitely look like it will hurt Hawaii for housing at all income levels,” he said.

Another House proposal would require people to live in their homes for at least five years to avoid paying capital gains taxes when they sell those homes, which would affect military personnel who buy homes while they are stationed in Hawaii, Oh said.

Tom Yamachika, president of the Tax Foundation of Hawaii, said the lower mortgage interest cap combined with eliminating the deduction for the state and local taxes that Hawaii residents pay “would hit us very hard.”

Bonham and Colby also contend the benefits of the proposed tax changes are sharply skewed in favor of the wealthy.

Bonham cited statistics from the Institute on Taxation and Economic Policy that show the tax changes proposed by the House would initially offer average tax cuts of more than $29,000 for the top 1 percent of earners in Hawaii.

The House plan would initially cut taxes for the middle 20 percent of Hawaii earners by a much lower average of $790 in 2018, and that gap between the benefits for upper- and lower-income taxpayers would increase in the years ahead, he said.

Scott Drenkard, economist with the national Tax Foundation, said the goal of the Republicans’ tax overhaul is to encourage growth, and lowering the top corporate income tax rate to 20 percent from 35 percent as the Republicans proposed will result in job growth and wage increases.

That dynamic will add almost a million jobs across the country in the next 10 years, including more than 4,300 that would be added in Hawaii, according to the Tax Foundation’s economic model. Drenkard said the House GOP proposal will cause an extra 3.9 percent growth in the gross domestic product, and an extra 3.1 percent growth in wages.

Hawaii critics of the tax plan doubt that most of those projected benefits will materialize.

The overall package is expected to increase the national debt by $1.5 trillion, and “we’re essentially talking about significantly adding to our debt in a plan that’s very unlikely to produce any kind of significant extra growth,” Bonham said.

Bonham said the research he has seen suggests the package would increase growth in gross domestic product by perhaps two-tenths or three-tenths of 1 percent. The plan increases the national debt “primarily to give very, very large tax cuts to the highest income earners in the United States and abroad,” he said.

When companies’ profits are taxed at a lower rate, that drives up the value of the companies’ stocks, which means cutting the corporate tax rate provides an immediate bonus to stockholders, Bonham said.

“About a third of all U.S. stock is owned by foreigners, so we’re essentially giving a nice, big tax cut to wealthy foreign investors in the U.S. stock market,” Bonham said.

Yamachika, of the Tax Foundation of Hawaii, is also skeptical of the idea that the amended tax code will allow most taxpayers to file their annual tax returns on a form the size of a postcard, as President Donald Trump suggested.

“That’s not happening,” Yamachika said. “I think there’s just too much complexity even under the bill even as written now. I kind of doubt that most people would be able to file a postcard-sized return.”

That is particularly true for business owners, but also applies to many ordinary wage earners because Congress appears likely to preserve some tax credits such as the earned income tax credit and the child tax credit as well as deductions for charitable donations, he said.

“It’s not going to be simple,” Yamachika said.