GOP deal in Senate likely to bring higher cap on SALT deduction
By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey
..... A popular tax break used in high-tax states like New Jersey would be capped at $40,000 - up from the $10,00 limit - under a deal reached over the weened [06/28-29/2025] by Republicans in Washington.
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The deal is part of President Donald Trump's "Big Beautiful Bill," which includes tax cuts, Medicaid reforms and border security funding. Trump's bill passed a key first hurdle in the U.S. Senate be a narrow 51-49 vote, and lawmakers were aiming to complete work on the bill on June 30. [2025]
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Under the agreement, the federal government would raise the cap from $10,000 to $40,000 on state and local property tax deductions, more commonly called the SALT deduction, for those earning up to $500,000 a year. The $40,000 cap would sunset in five years and then shrink back to $10,000.
..... there was no cap to the SALT deduction before a limit of $10,000 was imposed as part of the 2017 Tax Cuts and Jobs Act. Critics say the cap has targeted - and hurt residents in - often Democratic-leaning states with higher property taxes, such as New Jersey, California and New York.
..... Average property taxes in some New Jersey towns in 2024 were more than double the $10,000 cap, so homeowners could not claim the full property tax payment as a deduction on their federal income tax.
..... In Bergen County, for example, the average property tax bill for 2024 was more than $13,000, state records show.
..... One of the representatives from a high-tax state, Representative Mike Lawler, R-New York, announced the deal on X, formerly Twitter, calling it "meaningful relief for middle class families.
..... The deal caps off weeks of tense negotiations among Republicans in the Senate and House of Representatives. Lawler said he would not approve any version of Trump's tax bill that did not include a provisions he wanted on the higher SALT deduction cap.
..... But it was lambasted by Two New Jersey Democrats: Representative Josh Gottheimer, D-Tenafly, and Democratic gubernatorial candidate Representative Mikie Sherrill, D-Montclair.
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On social media, Gotheimer called the proposal a "complete joke," while Sherrill accused Trump Online of "doubling down on his proposal that leaves middle-class families paying more."
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All three representatives are members of the House's so-called SALT Caucus, which has aimed to remover or increase the $10,000 cap.
..... The SALT deduction lets people reduce the amount of their annual income that can be taxes by the federal government by subtracting how much they pay in state income taxes and local property taxes.
..... The deduction has existed since 1913, the Congressional Research Serve said, but there was no limit before the 2017 bill.
..... The current $10,000 cap on the deduction is set to expire at the end of this year, [2025] along with other tax cuts and provisions of the 2017 tax bill.
..... The 2017 tax bill also nearly doubled the standard deduction form $6,500 to $12,000 for individuals filers and from $13,00 to $24,000 for joint returns, said the nonpartisan Tax Policy Center.
..... "What Trump and Congress did at that point was dramatically increase the standard deduction but decrease the amount you could deduct for state and local taxes," said Marci Pfeiffer, a senior policy fellow at Rutgers University's Bloustein School of Planning and Public Policy, who studies local government in New Jersey.