The recent meeting between New York Republicans and Donald Trump at Mar-a-Lago highlighted growing momentum toward increasing the state and local tax SALT deduction, which had been limited by the 2017 tax law.
Representatives from high-tax states like New York, California, and New Jersey have long sought a fix, as the $10,000 cap on the deduction has resulted in higher taxes for many residents.
Trump expressed support for boosting the SALT deduction, directing lawmakers to return to Congress and negotiate a fair number.
However, the proposal faces challenges, especially from Republicans in low-tax states who oppose the deduction due to fiscal concerns. The GOP’s internal debate centers on finding a balance between providing relief to high-tax states and cutting spending. Trump’s favor for indexing the SALT cap to inflation was also discussed, which would allow the deduction to keep pace with rising costs.
The discussions also touched on other aspects, such as the alternative minimum tax set to return in 2026, which could diminish the SALT deduction’s effectiveness.
Some lawmakers, like Rep. Nicole Malliotakis, suggested limiting property tax deductions to reduce the cost of the relief while still providing substantial benefits to middle-class constituents.
Despite the complexities, the meeting signals a potential breakthrough in the long-standing issue, with Republicans eager to find consensus and push for a tax bill that could be a key part of their broader legislative agenda.
