A group of Republicans opposing the federal cap on state and local tax (SALT) deductions is set to meet with President-elect Donald Trump at Mar-a-Lago. During his 2024 presidential campaign, Trump vowed to “get SALT back,” rekindling debate over the controversial policy introduced in the 2018 Tax Cuts and Jobs Act (TCJA).
The Importance of SALT Cap Reform
The SALT cap limits taxpayers who itemize their federal tax filings to deducting a maximum of $10,000 for joint filers ($5,000 for single filers) in combined property, state income, or sales taxes. Before the TCJA, there was no cap on these deductions. Critics argue the cap disproportionately impacts residents of high-tax states, while supporters see it as a key tool for deficit reduction.
The current cap expires at the end of 2025, making the ongoing discussions between lawmakers and Trump a focal point for potential policy changes.
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Republican Efforts to Modify the Cap
Trump has been hosting meetings with Republican lawmakers to address internal party differences, including the SALT cap debate. A group of “SALT Republicans” is advocating for either the elimination of the cap or a significant increase. Proposals range from raising the cap to $30,000—an idea criticized for its potential to add $450 billion to the national deficit—to even higher thresholds under new legislative proposals.
Representative Mike Lawler (R-NY) introduced the SALT Fairness and Marriage Penalty Elimination Act, proposing a $100,000 cap for individual filers and $200,000 for joint filers. Calling the current cap “an unjust penalty,” Lawler emphasized its negative impact on middle-class families, especially in high-tax states like New York.
Other members of the Republican delegation pushing for reform include Representatives Nick LaLota, Nicole Malliotakis, Andrew Garbarino, Young Kim, and Tom Kean Jr.
Blue State Opposition and Economic Implications
Democrats and blue-state governors, including New York Governor Kathy Hochul, strongly oppose the SALT cap, labeling it a burden on middle-class families. Hochul argued that the cap costs New Yorkers $12 billion annually and demanded its full repeal. She stated:
“Republicans have drained billions directly from the pockets of their own constituents. It’s time for them to deliver. No excuses. No half measures. New Yorkers deserve a full repeal.”
However, research from the Tax Policy Center (TPC) suggests that repealing the SALT cap would primarily benefit wealthy households. According to a September 2024 analysis, households earning less than $63,000 would see little to no benefit, while high-income earners would reap 43% of the financial gains from a repeal.
Critics, including Representative Chip Roy (R-TX), argue that deficit reduction should remain a top priority. Roy described the SALT cap as a critical component of broader fiscal responsibility efforts.
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What Lawmakers Are Saying
Representative Lawler has stressed the importance of SALT cap reform for addressing New York’s affordability crisis. “Lifting the cap on SALT will provide relief to millions of New Yorkers and curb out-migration to lower-tax states,” he said. While advocating for full repeal, he supports incremental measures like the SALT Fairness Act.
Representative Nick LaLota echoed the sentiment, stating that raising the cap is his top legislative priority:
“A reasonable increase in the SALT deduction is critical for my constituents. I won’t compromise on delivering this relief.”
Looking Ahead
As Republicans prepare to negotiate the SALT cap with Trump, the outcome could significantly impact taxpayers in high-cost states and the broader federal deficit debate. Whether these discussions lead to a repeal or an adjusted cap remains to be seen.
