“I will always fight for New York families, and the SALT cap is hitting middle class New Yorkers where it hurts the most — their wallets. It’s unfair, it’s unsustainable and the solution is simple: no repeal, no deal.
“I am ready to work alongside Senators Schumer and Gillibrand, as well as our congressional delegation, to get this done once and for all. The SALT cap is costing New Yorkers as much as $12 billion a year and Congressional Republicans must get on board with a full repeal.”
The State and Local Tax (SALT) deduction is a provision in the U.S. federal tax code that allows taxpayers to deduct certain state and local taxes—such as property, income, or sales taxes—on their federal income tax returns. Historically, this deduction was uncapped, meaning taxpayers could deduct the full amount of these taxes, reducing their overall federal tax liability.
However, in 2017, the Tax Cuts and Jobs Act (TCJA) introduced a $10,000 cap on SALT deductions. This meant that taxpayers could only deduct up to $10,000 of their combined state and local taxes, regardless of how much they actually paid. The cap disproportionately affects taxpayers in high-tax states, such as New York, California, and New Jersey, where state and local taxes often far exceed this limit.
Why the SALT Cap Matters to New York:
- Impact on Taxpayers: New York has some of the highest state income and property taxes in the nation. Many middle-class families in the state pay far more than $10,000 in state and local taxes, but they can only deduct up to the cap, leading to a higher federal tax burden.
- Economic Implications: The cap has been particularly burdensome for middle- and upper-middle-class taxpayers in high-tax states, as it effectively reduces the financial benefit of living in areas with robust state-funded services (e.g., education, transportation, and public safety).
- Revenue Loss: The $12 billion annual cost referenced in Governor Hochul’s statement represents money that New York residents collectively pay in additional federal taxes due to the cap, potentially weakening the state’s economy.
- Political Dynamics: While some argue the SALT deduction primarily benefits higher-income households, opponents of the cap, including Governor Hochul, contend that it unfairly targets middle-class families in states like New York and penalizes them for their state’s tax policies. They seek a full repeal of the cap to restore fairness and ease the financial burden on their constituents.
Governor Hochul’s statement emphasizes that the SALT cap is “unfair and unsustainable” because it places an undue burden on New York families and calls for bipartisan action to repeal it. Her advocacy reflects a broader effort by officials in high-tax states to address what they see as a punitive measure that disproportionately affects their residents.
