GOP lawmakers from high-tax blue states are proposing a significant expansion to the federal cap on state and local tax (SALT) deductions, a move that would disproportionately benefit wealthy residents in Democratic-led states with high tax burdens.
New York Republican Representative Mike Lawler reintroduced the SALT Fairness and Marriage Penalty Elimination Act on Wednesday. The bill would raise the SALT deduction cap to $100,000 for single filers and $200,000 for married couples filing jointly. This marks a sharp departure from the current cap of $10,000, established under the 2017 Tax Cuts and Jobs Act (TCJA).
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“The $10,000 cap is woefully insufficient,” Rep. Lawler said in an interview with Bloomberg TV. “Taxpayers should not be penalized for living in a high-tax state. This is double taxation.”
The reintroduction of the bill comes ahead of a meeting between Republican lawmakers from blue states and President-elect Donald Trump at Mar-a-Lago this weekend. Discussions are expected to focus on incorporating SALT cap reforms into the GOP’s broader tax policy agenda. Other attendees reportedly include Reps. Nicole Malliotakis, Nick LaLota, and Andrew Garabino of New York, Tom Kean of New Jersey, and Young Kim of California.
Republicans like Rep. Lawler argue that the SALT cap unfairly penalizes residents of states with high tax burdens, including New York, California, and New Jersey. They contend that raising or repealing the cap would offer relief to taxpayers in these states.
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“Once again, we are working to bring tax relief to New Yorkers from the federal level because Democrats like [Governor] Hochul & [Mayor] Adams keep abusing our state’s taxpayers,” Rep. Malliotakis posted on X (formerly Twitter).
The 2017 TCJA, one of Trump’s hallmark legislative achievements, introduced the $10,000 SALT deduction cap. This cap is set to expire at the end of 2025 unless Congress extends it through new tax legislation.
President-elect Trump has previously expressed openness to revising the SALT cap. In a post on Truth Social last September, he floated the idea of reforms ahead of a campaign rally on Long Island.
While raising or repealing the SALT cap would provide relief for taxpayers in high-tax states, critics argue that the changes would primarily benefit high-income earners. According to the Tax Policy Center (TPC), households earning roughly $60,000 or less would not see any tax benefit from a repeal of the SALT cap.
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Additionally, fully repealing the SALT cap while extending the 2017 tax cuts would cost the federal government an estimated $1.2 trillion over the next decade, according to the Committee for a Responsible Budget.
Rep. Lawler has acknowledged the fiscal implications but maintains that the SALT cap is fundamentally unfair. “New York contributes more to the federal government than it receives,” Lawler argued, calling the current policy a “penalty” for residents of high-tax states.
The SALT deduction debate highlights the divide within the GOP, with blue-state Republicans advocating for relief measures while fiscal conservatives caution against policies they say disproportionately benefit the wealthy. As the 119th Congress gets underway, the proposed SALT reforms are expected to play a central role in negotiations over a comprehensive tax package.
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