Trump Advisers Consider Raising SALT Write-Off Limit to $20,000

Economic advisers to former President Donald Trump are deliberating on the possibility of increasing the state and local tax (SALT) deduction limit, which is a widely utilized yet costly tax benefit that could yield substantial savings for numerous residents of New York, New Jersey, and California.

On Thursday, economist Stephen Moore, who is a member of Trump’s economic advisory transition team, informed Bloomberg that discussions have taken place regarding the potential expansion of the tax deduction limit from $10,000 to $20,000.

During his campaign, Trump committed to reinstating the SALT deduction, a matter of significant importance in states where elevated tax rates coupled with high property values render the deduction particularly beneficial.

Moore expressed opposition to the idea of making the SALT deduction unlimited, despite the support from some politicians in New York and New Jersey advocating for this change. He argued that such an alteration would represent “the most substantial tax cut for millionaires and billionaires in history.” Conversely, he noted that increasing the deduction limit to $20,000 “would address the concerns of middle-class families in blue states.”

As of now, no determination has been reached regarding whether to implement the $20,000 limit for all taxpayers or to merely expand it for joint filers while maintaining the $10,000 deduction for individual filers. Moore indicated that any modifications to SALT would necessitate congressional approval.

The irony of Trump’s commitment to broaden the SALT deduction lies in the fact that his tax legislation enacted in 2017 significantly restricted this benefit. Since that time, there has been a bipartisan initiative among members of Congress from the New York City area and Southern California to extend the SALT deduction, as it disproportionately impacts residents in these regions.

Legislators will have an opportunity to modify SALT next year, as substantial elements of Trump’s tax law, including the SALT limit, are set to expire at the conclusion of 2025. With Republicans controlling both chambers of Congress and the presidency next year, there are already plans being drafted regarding the extension of the tax law, although contentious debates are anticipated concerning the treatment of specific provisions, including SALT.

Many Republican lawmakers are against the expansion of SALT, as maintaining the $10,000 limit in certain areas aids in offsetting the costs associated with other tax reductions. In many lower-tax regions, which are primarily represented by Republican legislators, the deduction holds less significance compared to its value in states such as New York or California.

Nevertheless, slim margins in the House may necessitate some adjustments to SALT in order to secure the support of Republicans from areas where the deduction is favorable. Representative Mike Lawler, a Republican from New York, has stated that he will not endorse any tax legislation that does not eliminate the SALT cap.