Last weekend, when his meeting with President-elect Donald Trump made headlines, new questions arose over the future of the SALT cap, but what exactly is the SALT tax and what's in store for us in 2025? I wonder?
With a notable deadline looming this year, questions remain about the future of the cap, which was introduced under President Trump in 2017. And with tax season approaching, those questions are likely to grow even more.
Here's what you need to know about SALT and what's coming in 2025.
What is SALT? What is the cap?
SALT stands for “state and local taxes.” According to tax foundationThis is a deduction that “allows taxpayers who itemize when filing their federal taxes to deduct certain taxes paid to state and local governments.”
In 2017, the Tax Cuts and Jobs Act overhauled federal tax law, capping the SALT deduction for “property taxes and state income or sales taxes” at $10,000 per year.
However, most of the changes made in the TCJA expire on December 31, 2025.
How does the SALT deduction work?
Under SALT, people who itemize their taxes can deduct up to $10,000 in “property, sales, or income taxes already paid to state or local governments.”
Experts say the deduction is primarily used in high-tax states such as New York, New Jersey and California.
According to the Joint Committee on Taxation, before the Tax Cuts and Jobs Act was enacted, in six states, including Illinois, the majority of SALT deduction benefits were claimed by people with incomes of $100,000 or more.
What happens next?
In a joint statement Saturday, SALT caucus co-chairs Republican Rep. Andrew Garbarino of New York and Rep. Young Kim of California referred to a meeting they had with Mr. Trump earlier in the day.
“Our voters are suffering from the SALT cap, and President Trump has promised to address this issue for our district. We had a productive meeting tonight. We will continue to fight to resolve this important issue so that we can ensure that we are protected,” the statement said. It's their hard earned money. ”
President Trump has previously expressed support for repealing the SALT cap, even though it was put in place during his presidential term.
in September Truth Social post, “I'm going to turn things around, I'm going to bring back salt, I'm going to lower taxes, and I'm going to turn things around,” Trump said.
It is not yet clear how lawmakers will move toward allowing an unlimited SALT cap, or whether they will instead raise the cap.
According to CNBC, some House Republicans are asking party leaders to consider alternative ways to pay, such as lowering the corporate tax rate from 21% to 15%.
last week, politiko It reported that a proposal to allow married couples a $20,000 deduction is being considered.
According to Tax Policy CenterUnder the measure, the federal debt is estimated to increase by about $225 billion from 2025 to 2034, with “nearly all the benefits going to households making about $200,000 or more.” Still, the center said the benefits would be small, with the average tax cut for couples only being $270.
Some lawmakers have argued that the SALT cap disproportionately impacts high-tax blue states, but “some progressives and tax policy experts have defended the cap. , argues that its repeal will primarily benefit the wealthy,” CNBC reported.
