SALT tax break gets fresh push from New York-area Republicans

New York Republicans, whose congressional ranks swelled in the last election, are reviving plans to expand the state and local tax break, picking up a piece of unfinished business from Democrats that has been resisted by most in their own party.

The lawmakers — with the GOP in control of the House following November midterms in which the party flipped four New York seats in the chamber — are prioritizing the tax break, known as SALT, which has become a top political issue in the region. 

“We’re a large delegation now in New York, and we need to be heard,” Republican Representative Nicole Malliotakis, who represents Staten Island and a portion of southern Brooklyn, said in an interview this week. “This is the issue that we’ve decided to really put our flag down and say this is something we really need to do to provide some relief for middle class families.”

Until now, SALT has primarily been an issue championed by Democrats as they attempted and failed multiple times to increase the deduction — which was capped at $10,000 as part of former President Donald Trump’s tax law — while they had control of Congress and the White House. 

Republicans’ focus on SALT demonstrates how the issue cuts along largely regional rather than partisan lines: 12 of the 13 GOP House members who voted against Trump’s tax bill, which curbed the SALT deduction as a way to pay for other levy cuts, were from New York, New Jersey or California and largely cited changes to SALT as the reason for their opposition. 

This deduction is very popular in heavily taxed areas like New York and New Jersey where high local taxes, high property values and incomes above the national average mean that there are higher concentrations of residents with large SALT bills. In other, lower-tax areas, like Florida or Tennessee, the average SALT bill is well under the $10,000 cap, making it less of a political issues in those places.
The provision, which allows taxpayers to deduct the amount they pay in state and local levies from their federal taxable income, only increased in importance among Republicans as the party has picked up suburban seats in places like New York and California. 

Malliotakis said she has proposed several options on how to increase the tax write-off. One idea is to double the cap for married couples, meaning joint filers could claim up to $20,000 in deductions. Another option is to increase the threshold or tie it to inflation. She has also proposed making the write-off unlimited for households earning less than $400,000.

Malliotakis said she’s discussing those options with colleagues and plans to introduce a bill once there’s consensus about what approach has enough support to pass the House. Any proposal would likely need the support of both Republicans and Democrats.

Representative Michelle Steel, a Republican from Southern California who sits on the Ways and Means Committee, is also among those pushing for a SALT expansion. 

The issue could get traction this year, but will likely have to wait until after Congress resolves a looming debt-ceiling crisis that will likely come to a head this summer.

The discussions about SALT in Congress are ongoing as taxpayers file their fifth tax return with the $10,000 cap. The deadline to file federal returns is April 18 this year.