Trump vows to reverse SALT deduction cap he signed in 2017

Former President Trump suggested this week that if he returns to the White House he will do away with the $10,000 cap on deducting state and local taxes (SALT), which was implemented as part of his signature 2017 tax reforms.

In a pitch to New York voters ahead of his Long Island rally on Wednesday, the Republican nominee wrote on his Truth Social platform that he would turn the state around, vowing to “get SALT back, lower your [t]axes, and so much more.”

Before Republicans capped the SALT deduction as part of the Tax Cuts and Jobs Act in 2017, taxpayers could freely deduct their state and local taxes from their federal taxes, helping them to offset some of their liability. Many critics argued that the deduction disproportionately benefited wealthy homeowners in states with high taxes, like New York, California and New Jersey. 

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But there has been a growing chorus of lawmakers who say the cap hurts middle-class homeowners living in regions with steep property taxes. They also have criticized the limit as a “marriage penalty” because it is the same for single and joint filers.

Congress briefly weighed doing away with the SALT deduction cap earlier this year, but the effort never made it off the ground. The cap is poised to sunset at the end of 2025.

Madison Ventures Plus managing director Mitch Roschelle told FOX Business’ “Varney & Co.” that bringing back the SALT deduction would help high-tax blue states like New York, New Jersey, Illinois and California “because people were fleeing those states… because of the lack of ability to deduct.”

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Roschelle noted that property taxes are included in the SALT deduction, and said that doing away with the cap would be “a game changer to help blue states, with their lack of demand for housing in some places.”

But economist EJ Antoni, a research fellow at conservative think tank the Heritage Foundation, disagrees that ditching the SALT deduction cap is good policy.

“This is an incredibly economically inefficient deduction that we have within the tax code, and kudos to President Trump, when he signed the tax reform under his first administration, where they actually imposed that limit,” Antoni told “Varney & Co.”

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“Let’s not forget that this deduction goes almost exclusively to very high-income individuals in very high-tax states,” he argued. “By essentially eliminating that cap, again, what you’re going to do is return to a situation where the rest of the country is helping to foot the bill for those high-income earners, again in very few locations.”

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