Former President Donald Trump on Tuesday vowed to restore the state and local tax deduction he won back during his first term, hoping to appeal to Democratic New York state ahead of a rally on Long Island.
The SALT deduction allows taxpayers to deduct state and local taxes from their adjusted gross income for federal income tax purposes.
Trump, 78, previously signed the Tax Cuts and Jobs Act of 2017, which set a SALT cap of $10,000, disproportionately impacting high-tax, Democratic-leaning states like New York.
“I will turn things around, bring back SALT, lower taxes and much more. I will work with a Democratic Governor and Mayor to secure the funding to bring New York State back to levels not seen in 50 years.” Trump pledged to a society of truth.
The Queens-born Trump is determined to flip New York state in this election, and the 45th president declared that a rally on Wednesday night at Nassau Coliseum on Long Island “is going to be really big.”
“It's going to be full of patriots! We have a real chance of winning New York for the first time in decades,” he added on Truth Social. “What have you got to lose? Vote Trump!”
Politicians in New York and New Jersey have long aimed to eliminate or significantly reduce the cap on the SALT deduction to ease the burden on their constituents.
How will this affect the people of New York?
The Washington Post estimates that for an individual making $100,000 a year in 2023 and paying $20,500 in state, local, property and other targeted taxes, eliminating the SALT cap could save them about $2,300 in federal tax payments.
This does not take into account other deductions. Your exact tax amount will depend on your individual circumstances.
Higher-income earners would benefit more from the elimination of the SALT cap.
But for most taxpayers, eliminating the SALT cap would likely not be of personal benefit because most Americans choose to take the standard deduction rather than itemize deductions. The IRS in 2018About 87.3% took the standard deduction.
Still, it could be a boon for New York's economy.
Former New York Governor Andrew Cuomo campaigned for eliminating the SALT cap before leaving office, arguing it would boost New York's economy, provide tax cuts and reduce the incentive for high-income earners to leave the state.
“Repealing SALT would reduce the state's effective tax rate on high-income earners by 37 percent,” he said in 2021. “The state's new top tax rate of 10.9 percent would result in an effective tax rate of 6.9 percent.”
New York Republicans, as well as many of their counterparts in the Garden State, have long advocated for lowering the SALT cap.
In 2021, Democrats such as Rep. Josh Gottheimer (D-N.J.) argued for raising the cap, which has been one of the most costly aspects of several iterations of the so-called “Build Back Better” plan. It caused controversy within the party..
Democrats ultimately abandoned the plan in favor of a scaled-down version of the Anti-Inflation Act.
In the weeds
In 2017, when Republicans controlled both houses of Congress, they imposed a $10,000 cap on the SALT deduction in an effort to reduce the deficit caused by corporate tax reform.
This was part of a broader effort to simplify the tax code.
At the time the bill was passed, several New York state legislators, including future House Republican Conference Chairwoman Elise Stefanik (R-NY), opposed the reform bill due to their dissatisfaction with the SALT cap.
Because Republicans lacked a filibuster-proof majority and Democratic support in the Senate, they had to rely on a process known as “reconciliation” to pass corporate tax reform through the Senate.
The settlement requires that, under the Byrd Rule, the deficit cannot be increased by law after the 10-year mark.
As a result, some provisions of the 2017 tax reform package: SALT caps, etc. It's set to expire at the end of 2025, and could reduce federal revenues by $139 billion. According to the bipartisan Joint Committee on Taxation:.
President Trump's tax cut rush
Throughout his 2024 campaign, Trump has pledged to make significant tax cuts in several areas, including eliminating taxes on tips and Social Security.
Many of the policy proposals appear to be targeted at key voter groups in Nevada, such as workers and seniors in the service-rich state, who could be key to winning the presidential election on November 5.
The 45th president has not offered details about how these specific tax cuts would work or how he would pay for them. At one point, Trump threatened to impose broad tariffs of 10-20% on foreign imports, as well as a 60% tariff on China.
Senior Fellow at the libertarian-leaning Manhattan Institute Brian Riedl estimates President Trump's tax cuts The budget deficit could increase by $11 trillion More than 10 years.
