SALT Caucus Looks to Restore Tax Deduction
Members of Congress from Long Island have not given up on SALT, the tax break that favors high-priced states such as New York.
The State and Local Tax deduction used to allow homeowners to avoid paying federal taxes on the income used to pay local taxes. With the support of low-tax states, Congress capped the deduction at $10,000 in 2018, a measure opposed by the representatives of what’s become the bipartisan “SALT Caucus.”
Long Island reps Andrew Garbarino and Tom Suozzi co-chair the caucus and recently strategized with their counterparts in other high-tax states.
“Between 1913 and 2017, taxpayers were able to deduct what they paid in their local property or state taxes before paying their federal taxes—to avoid getting taxed twice on the same income,” Garbarino explained. “The SALT deduction, which stopped double taxation, was capped at $10,000 as part of the Tax Cut and Jobs Act.”
The caucus was relaunched last year to coordinate messaging and advocacy surrounding the SALT deduction. They pushed four bipartisan bills restoring the measure through the House but were blocked in the Senate.
“The SALT cap is detrimental for my constituents who pay some of the highest state and local taxes in the country,” said Garbarino, a Republican. “Restoring SALT requires that we rebuild a nationwide coalition of Democrats and Republicans, mayors and other state and local officials, teachers and firefighters, realtors and homeowners,” Rep. Tom Suozzi, a Democrat, said. “People should not be taxed on taxes they already paid.”
Before it was revoked, 91% of the taxpayers claiming the deduction had incomes above $100,000 and lived in only six states: California, Illinois, New Jersey, New York, Pennsylvania, and Texas. The deduction was part of the Tax Cuts & Jobs Act passed during the Trump presidency. Without further action by Congress, it would be automatically reinstated when the provisions of the TCJA sunset next year. The SALT Caucus is looking to restore the deduction before then.
With its high taxes and massive government, New York’s economic outlook was the worst of all 50 states, according to the 17th annual “Rich State, Poor State Report.” The state breaks records each year for government spending, with this year’s $237 billion budget nearly $121 billion more than Florida, which has a larger population and no income tax. Taxpayer relief is not expected anytime soon as Gov. Kathy Hochul’s Division of the Budget estimates that the state will run a $2.3 billion deficit in 2026, $4.3 billion in 2027, and $7.3 billion in 2028.
“The SALT deduction is a large tax expenditure, meaning it is among the provisions in the tax code that provides a special deduction, credit, exclusion, or other tax preference that wouldn’t be included in a ‘normal’ tax code,” the U.S. Tax Foundation noted. If reinstated, the deduction for state and local taxes would amount to more than $24 billion annually.