In the News
Times Union: Higher SALT cap deal struck by NY Republicans expected to stick
By Dan Clark,
July 2, 2025
WASHINGTON — Eight years after Republicans in Congress voted to cap the level of state and local tax deductions that primarily benefit residents in high-tax states like New York, they’re now on track to partially reverse that change.
Filers who itemize their deductions would be able to deduct up to $40,000 in state and local taxes on their federal returns — four times as much was what is allowed now.
The new cap was included in the massive spending bill that’s expected to receive final approval in the U.S. House after passing the Senate Tuesday.
The increase is largely the result of efforts by Republicans from New York, who had threatened to withhold support for the bill if a higher cap wasn’t included. Because of the narrow majority they hold in the House, that was enough to force a deal.
“I made very clear when I came to Congress that this was a key issue, that we would fight to lift the cap,” U.S. Rep. Mike Lawler said in a recent television interview. “We have fought tirelessly for this.”
Lawler, a Republican who represents part of the lower Hudson Valley, emerged as a lead negotiator in the debate over the cap in recent months.
It was a key sticking point among Republicans in the House when the spending bill was under discussion this spring. Because a higher SALT cap largely benefits high-tax states, which tend to be led by Democrats, there was opposition.
“We’re going to be talking about that but the biggest beneficiary if we do that are governors from New York, Illinois and California, and those governors are the ones who blew it because they weren’t able to get it,” Trump said amid the political division in May.
But after several long meetings — including a visit from Trump to Capitol Hill — Lawler and other Republicans in the so-called “SALT Caucus” prevailed.
“This is meaningful relief for middle-class families in the Hudson Valley who have been hit hard by the current $10,000 cap,” Lawler said.
There was no limit on the amount of state and local taxes a filer could deduct from their federal taxes before the $10,000 cap was installed by Congress in 2017. That benefited high-income earners in New York in particular.
While that limit would now be higher, it would apply to fewer people. Only taxpayers with incomes below $500,000 would be eligible for the new $40,000 cap, which would phase out for filers who earn more.
It’s not the ideal agreement for Republicans from New York, who wanted to revert back to limitless state and local tax deductions, but lawmakers like Rep. Nicole Malliotakis from Staten Island have said it would go a long way.
“I think quadrupling the SALT deduction is great,” Malliotakis said in a recent interview. “This is a deal that I think is very palatable and will certainly make my constituents happy because they are getting crushed with high property and income taxes.”
That’s the reason why filers in New York were so impacted when the $10,000 cap was put in place.
The average amount in state and local taxes that was deducted by filers in New York in 2017 was $23,804, according to USAFacts, a nonprofit data analysis firm.
About 35% of filers took advantage of those deductions at the time. That’s since dropped to about 10% as of 2022.
New York ranks highest in the nation for state and local tax collections per capita at $12,685 as of 2022, according to the latest data from the Tax Foundation, a right-leaning think tank.
Another analysis from the group found that six New York counties — Westchester, Suffolk, Rockland, Putnam, Nassau and Manhattan — have the highest median property taxes, as of 2023, behind only one county in Virginia.
But the higher cap would come with a cost of hundreds of billions of dollars over 10 years, according to the analysis, because of the resulting loss of federal tax revenue through deductions.
Democrats from New York haven’t come out against the higher cap but have been critical of other parts of the bill that complement it, including a sustained tax rate for high-income earners.
They’ve argued that those changes are being paid for through cuts elsewhere, including new limits on Medicaid that New York officials have asserted will strip more than a million people in the state of their taxpayer-subsidized health insurance.
“Every single New York Republican in Congress backed this disaster,” Gov. Kathy Hochul said in a statement. “They helped write it, cheered it on, and voted to gut the very programs that keep their constituents alive.”
https://www.timesunion.com/state/article/higher-salt-cap-trump-s-spending-bill-expected-20413780.php |