The fight over the SALT (State and Local Taxes) deduction cap is getting pretty intense. Most notably, a couple of weeks ago, Rep. Nicole Malliotakis, R-N.Y., tried to rally opposition to the current $10,000 limit. The Tax Cuts and Jobs Act (TCJA) enacted the $10,000 SALT deduction cap in 2017. This cap has faced significant backlash as it unfairly punishes taxpayers living in usually blue, high-tax states like New York, New Jersey, and California.
Lawmakers have highlighted the cap’s detrimental effect on couples who file their taxes jointly. Most think it imposes a “marriage penalty” that reduces their financial flexibility. Under the current law, married filers are capped at being able to deduct more than $10,000 for the SALT deduction when they itemize their tax breaks. This limitation has been the source of considerable controversy. Its previous, bipartisan level was $40,000 until House Republicans pushed the first amendment to raise it beyond that in May 2025.
Others say legislators should maintain the lower $500 limit for budgetary reasons. At the same time, a robust pro-environment wing of the Republican party is fighting the good fight. Rep. Mike Lawler, R-N.Y., characterized the Senate’s proposed $10,000 SALT deduction limit as “DEAD ON ARRIVAL,” reflecting a broader sentiment among Republicans in areas adversely affected by the cap.
That’s because about 90% of filers maxed out these itemized tax breaks by claiming the standard deduction. Yet for those who itemize, the new $10,000 cap on state and local tax (SALT) deductions is a much bigger hurdle. In addition, the recent corporate alternative minimum tax has eaten into the benefits of this deduction for higher earners. This change adds further confusion to the tax policy landscape.
Rep. Malliotakis articulated her frustration over the situation, stating that the current cap is “not only insulting but a slap in the face to the Republican districts that delivered our majority and trifecta.” Her remarks highlight a developing consensus among certain lawmakers that it is past time to re-examine the SALT deduction.
John Thune, a prominent figure in the Senate, expressed optimism about reaching a compromise that would satisfy both chambers of Congress. He stated, “I think at the end of the day, we’ll find a landing spot, hopefully that will get the votes that we need in the House, a compromise position on the SALT issue.”
Debate on comprehensive tax reform is definitely picking up steam. The SALT deduction cap will shape the more consequential policy fights to come. The contention it has generated highlights the complexities of tax legislation, especially in balancing fiscal responsibility with the needs of constituents in high-tax states.