Donald Trump has made a bold promise, vowing to “get SALT back” if he is re-elected in November. This promise entails restoring the full deduction for state and local taxes, a significant change from his previous stance on the issue. This announcement has reignited discussions about tax policy and its impact on homeowners in high-tax states.
The State and Local Tax (SALT) deduction, a long-standing feature of the U.S. tax code, was capped at $10,000 under the 2017 Tax Cuts and Jobs Act, a key legislative achievement during Trump’s presidency. This cap, according to The Real Deal, disproportionately affected residents of high-tax states like New York, California, and New Jersey, many of whom previously deducted far more than $10,000 in state and local taxes from their federal returns.
Trump’s promise comes as he seeks to appeal to voters in these affected areas. He made the announcement ahead of a rally on Long Island, where the impact of the SALT cap has been particularly felt, according to the New York Daily News. In 2017, the cap was implemented as a way to offset other tax cuts in the broader reform package and received support from Republican leadership in Congress. Now, with Trump seeking to broaden his appeal, the issue has resurfaced as a potential point of bipartisan agreement.
Senate Majority Leader Chuck Schumer, a long-time advocate for restoring the full SALT deduction, sees this as an opportunity to garner bipartisan support for a change that would benefit his New York constituents. However, the path to restoring the full SALT deduction is not without obstacles. Critics argue that the move would primarily benefit high-income households in wealthy states, potentially exacerbating income inequality. Some policy experts have suggested raising the cap to $80,000 or limiting the deduction to households with incomes below $500,000.
It’s important to note that the current SALT cap, along with other provisions of the 2017 tax law, is set to expire at the end of 2025. This means that, barring new legislation, the full deduction would be automatically restored. Trump’s pledge, therefore, raises questions about whether he would seek to expedite the process or make the change permanent.
While Trump’s promise has breathed new life into the SALT debate, the deduction’s ultimate fate will depend on the outcome of the upcoming election and the composition of the next Congress. The future of the SALT deduction remains uncertain, with significant implications for homeowners and the overall tax landscape.
