The Republican tax plan proposed in the U.S. House aims to increase the state and local property tax deduction cap from $10,000 to $30,000 for families earning up to $400,000. This proposal was released by the Republican-led House Ways and Means Committee on May 12.
Members of the House’s “SALT Caucus” have expressed dissatisfaction with this plan. New York Representatives Mike Lawler, Elise Stefanik, Andrew Garbarino, and Nick LaLota issued a joint statement saying, “We’ve negotiated in good faith on SALT from the start, fighting for the taxpayers.” They criticized the proposal as being insufficient and potentially jeopardizing President Trump’s legislative agenda.
The bill is scheduled for debate and voting by the committee on May 13 at 2:30 p.m.
North Jersey Democratic Representative Mikie Sherrill called Republican support for the proposal “unacceptable.” Similarly, Representative Josh Gottheimer stated that it “just doesn’t cut it,” emphasizing concerns about affordability for New Jersey families. Both representatives are gubernatorial candidates who previously advocated for higher caps or complete repeal of the deduction limit.
New Jersey’s congressional Republicans have also suggested increasing but not eliminating the cap. The GOP’s broader tax proposal includes extending President Donald Trump’s 2017 tax cuts while tightening social safety net benefits to fund these measures. House Speaker Mike Johnson aims to pass this bill before Memorial Day weekend starting May 24.
The SALT deduction allows taxpayers to reduce their taxable income by deducting state income taxes and local property taxes paid. Critics argue that capping this deduction has negatively impacted states with high taxes like New Jersey and California.
A study by Wharton School estimates that raising the cap could cost between $22 billion and $197 billion over ten years if limited to married filers making up to $500,000 annually.
In New Jersey, average property tax bills exceeded $10,000 in 2024 according to state data. Doubling the current cap could benefit more residents according to Marc Pfeiffer from Rutgers University’s Bloustein School of Planning and Public Policy.
Progressive voices such as Senator Bernie Sanders criticize lifting the SALT cap as benefiting wealthier households primarily. A report from February 2024 by Tax Foundation indicates most relief would go to those earning between $200,000 and $500,000. The Committee for a Responsible Federal Budget labeled repealing the cap as “costly” and “regressive.”
Peter Chen from New Jersey Policy Perspective noted that higher-income individuals would benefit most from removing the cap. However, defenders argue many middle-income homeowners also gain advantages despite larger savings accruing to wealthier individuals.
According to a 2021 report by Institute on Taxation and Economic Policy, 80% of affected New Jersey residents had incomes up to $216,000. Gottheimer emphasized last year that limiting SALT deductions mostly affected middle-class workers like police officers and teachers.
