SALT Tax Reform

A bipartisan coalition in the House of Representatives has renewed its push to lift the $10,000 cap on deducting state and local taxes (SALT) from federal tax returns.

The so-called cap was enacted in 2017 as part of then-President Donald Trump’s federal tax cuts, the Tax Cut and Jobs Act (TCJA). It’s mostly impacted higher-income property owners in states such as California, New Jersey, and New York.

The SALT Caucus was established to advocate for a repeal of the cap. Originally formed in 2021, the group of nearly three dozen U.S. Representatives has added new names from both sides of the aisle in its efforts to lift the cap. They include Democrat of New York Pat Ryan and New York Republicans Mike Lawler, Marc Molinaro, Anthony D’Esposito, and Nick LaLota.

“This policy violates 150 years of precedent in federal tax law, disproportionately harms New York, and unfairly imposes a marriage penalty on couples filing jointly by having them face the same $10,000 cap as individuals,” said Ryan in a statement. “According to research by the National Association of Realtors, in New York, 35% of taxpayers claimed the SALT deduction in 2016 before it was capped. Raising the SALT cap would therefore lower taxes for tens of thousands of New Yorkers.”

The group is led by New York Republican Andrew Garbarino along with fellow Republican Young Kim of California and Democrats Josh Gottheimer of New Jersey and Anna G. Eshoo of California. “The cap on the SALT deduction is an attack on the middle class, raising taxes on 200,000 families in my Congressional District,” said Eshoo, SALT Caucus Co-Chair. “Prior to the 2017 tax law, my constituents claimed an average deduction of $63,083, and as a co-chair of the bipartisan SALT Caucus, I’m firmly committed to restoring this vital deduction for Californians.”

Gottheimer said the caucus would consider two outcomes: letting the cap expire or negotiating from a position of power. “We’re not going to be a cheap date to our negotiators, so we’re not going to settle for a low-bid offer,” he said. “So, if you want to talk, this is the caucus to talk to get this done, to restore SALT and make life more affordable.”

Whether the group can come together on a specific measure remains to be seen as several members have already come out with different proposals to address the cap.

Rep. Katie Porter, Democrat of California trumpeted her efforts in the last Congress on a “sensible limit” that would increase federal revenue over the long term. Porter co-sponsored legislation that would eliminate the cap for households making up to $400,000, then reinstate the limit on a sliding scale beginning at $60,000 and ultimately phasing out completely for households earning at least $1 million.

California Republican Mike Garcia is promoting a measure that would eliminate the SALT cap entirely. “I think we need to hold this ground very firm, not give into negotiations unless it’s a straight-stock removal of this SALT cap,” he said.

Representatives Mikie Sherrill, Democrat of New Jersey, and New York Republican Mike Lawler have a bill to lift the SALT cap to $100,000 for individuals and $200,000 for married couples filing taxes jointly through 2025, before it expires.