Former President Donald Trump, a vocal proponent of tax cuts, has floated the idea of reversing a measure passed during his tenure in the White House that effectively raised taxes for many American homeowners.
In a post on Truth Social on Tuesday, Trump suggested he would eliminate the $10,000 cap on the state and local tax (SALT) deduction that was passed as part of the 2017 Tax Cuts and Jobs Act — a massive overhaul that he said boosted economic growth.
Ahead of the November election, Trump said in the message that he would “take back SALT, cut taxes and much more,” but did not provide further details. Trump released the message ahead of a speech he will deliver Wednesday at the Nassau Coliseum on Long Island.
Trump’s new proposal to eliminate the $10,000 deduction cap for SALT contributions comes as the presidential candidate proposes several additional tax cuts that, if enacted, would lower taxes for large groups of voters. He has also promised to eliminate taxes on Social security benefitsa pledge that could gain the support of the country’s seniors, as well as ending income taxes tipped workers and on overtime payideas that would help low- and middle-income Americans.
However, Trump’s reversal on the SALT deduction has drawn skepticism from lawmakers as well as economists and policy experts.
“So…now Trump is against the SALT tax cap which *checks notes* is a key part of the only major piece of legislation passed during his administration?” Chris Koski, a political science professor at Reed College in Portland, Oregon, noted on X.
Democratic Rep. Tom Suozzi of Nassau, Queens, said in a statement Wednesday that he was “glad the former president said he finally reversed his devastating 2017 decision to limit the state and local tax (SALT) deduction.” He also urged Trump to convince Republican lawmakers to vote to restore the full deduction “if he’s really serious.”
The SALT deduction cap “has been a major blow to my constituents over the last seven years,” Suozzi added.
New York Democratic Sen. Chuck Schumer wrote on X: “Donald Trump cut off your SALT donations and hurt so many Long Island families. Now he comes to Long Island to pretend he supports SALT. It won’t work.”
Asked about the specifics of Trump’s proposal to reinstate the SALT tax deduction, a Trump campaign spokeswoman told CBS MoneyWatch: “While his pro-growth and pro-energy policies will make life affordable again, President Trump will also quickly implement tax breaks for workers and seniors.”
Here’s what you need to know about the SALT deduction.
What is the SALT deduction?
The state and local tax deduction allows taxpayers who itemize their expenses to deduct property taxes, sales taxes, and state or local income taxes from their federal income taxes. Before the Tax Cuts and Jobs Act, there was no limit to the amount people could deduct through the SALT deduction.
But the 2017 tax reform passed under Trump capped the deduction at $10,000, a blow to many homeowners in high-tax states, many of which lean Democratic. At the time of the law’s passage, the Treasury Department estimated that nearly 11 million taxpayers in high-tax states like New York and New Jersey would miss out on the deduction. $323 billion in deductions.
Who benefits from the SALT deduction?
Homeowners with high property taxes, such as residents of New York, New Jersey and California, were the biggest beneficiaries of the full SALT deduction.
But some experts have also noted that the SALT deduction has mostly put more money into the pockets of higher-income Americans. About 80% of the full SALT deduction has helped people earning more than $100,000 a year, according to the Tax Foundation.
What Happened After Trump Capped the SALT Deduction at $10,000?
This limit has had an increasing impact on middle-class homeowners in the United States due to rising property taxes and incomes. Some lawmakers have also sought to repeal or increase the SALT cap, but neither effort has been successful.
Earlier this year, some lawmakers sought to double the SALT deduction cap to $20,000 for married couples, with the change retroactive to the 2023 tax year. But that bill stalled in the House in February.
Won’t the SALT deduction cap expire anyway?
Yes, the SALT deduction cap is a provision that is set to expire in 2025, like many other parts of the Tax Cuts and Jobs Act, such as the reduction in individual tax brackets. But Trump has already indicated that he wants to extend the provisions of his signature tax law.
How much would it cost the United States to repeal the SALT deduction cap?
It won’t be cheap, according to the Committee for a Responsible Federal Budget, a think tank that focuses on budget and policy issues.
Eliminating the $10,000 deduction limit “would increase the cost of extending the Tax Cuts and Jobs Act of 2017 (TCJA) by $1.2 trillion over a decade,” the group said, adding that such a move would be a “costly mistake.”
Extending the TCJA tax cuts would increase the nation’s deficit by $3.9 trillion over the next decade, the group estimates. Adding in the expiration or repeal of the SALT deduction cap would raise that amount to $5.1 trillion, it adds.
“Lawmakers should not extend the TCJA without a plan to – at a minimum – offset the costs of the extension, but ideally the plan would increase revenue over current law and help put the national debt on a better trajectory,” the group said in a statement.
