By David Lightman
The Sacramento Bee
(TNS)
Finally, the long-sought lifting of the cap on state and local tax deductions seems to have the support it needs in Congress.
“I am confident we will get it done,” said Rep. Mike Lawler, R-New York, a leader in the battle to end the $10,000 per filer limit.
A lot of Democrats are sympathetic.
“You have the same Democrats who want to deal with and you have a pretty vocal group of Republicans,” said Rep. Mike Thompson, D-Calif., a senior member of the tax-writing House Ways & Means Committee.
Perhaps most important, President-elect Donald Trump backs the idea.
The $10,000 per federal income tax return cap on the deductions, called SALT, was imposed in 2017 as part of the sweeping overhaul of the tax code pushed by Trump. Most of its provisions expire at the end of next year.
Trump and congressional Republicans say they’ll make a massive tax bill one of their first 2025 priorities. “Next year, we will deliver the largest Tax Cuts in the History of our Country,” Trump said on his Truth Social site December 22.
Action on the tax bill is expected to be swift and largely partisan. Republicans will control both the House and Senate starting Friday, and need only simple majorities to pass the legislation. But because their margins are so thin in both chambers, SALT advocates are expected to have more clout than usual.
Republican and Democratic lawmakers from high tax states, notably California, New York and New Jersey, have fought for years to lift or modify the cap. They’ve been stymied by colleagues’ concerns about the change’s cost, and many members’ worry that lifting the cap would look like it was a big break for wealthier people.
Those concerns remain.
Help for the rich?
“Repealing the SALT cap would be costly, discretionary and regressive,” said an analysis from the nonpartisan Committee for a Responsible Federal Budget, a deficit watchdog group. It estimated lifting the cap would cost the already debt-ridden federal government $1.2 trillion over 10 years.
Studies have also found that the biggest beneficiaries of a lifted cap are the wealthiest taxpayers.
A study by the nonpartisan Tax Policy Center found that about 92% of the tax break would go to households in the top 10% percent of earners. The bottom 60% would get less than 1% of the benefits.
“I wouldn’t expect it to pass because the Democrats always complain we’re helping rich people. That’s helping the top 10% with a massive windfall of billions and billions of dollars,” said Sen. Charles Grassley, R-Iowa, a key architect of the 2017 tax bill.
Thompson and others, though, said that the cap could be lifted at the same time legislation curbs some of the tax breaks for the wealthy.
“That’s why there’s an ongoing discussion of how we deal with this,” said Thompson.
The people the cap affects most deeply, he said, are “regular working class people.”
Trump economic advisers are said to be wary of lifting the cap entirely. Economist Stephen Moore, a member of the economic transition group, told Bloomberg in December that the team has talked about raising the cap to $20,000.
It’s unclear just what will happen, except for this much: “The issue is in play for a variety of reasons. Many members of Congress and senators from states affected say this is a top issue,” said Sen. Ron Wyden, D-Oregon, top Democrat on the tax-writing Senate Finance Committee.
In short, he said, “SALT is in play.”
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©2025 The Sacramento Bee. Visit at sacbee.com. Distributed by Tribune Content Agency LLC.
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Tags: Legislation, State and Local Taxes, Taxes
