Trump Suggests Restoring the State and Local Tax Break He Once Limited

by · NY Times

Trump Suggests Restoring the State and Local Tax Break He Once Limited

Former President Donald J. Trump’s 2017 tax law capped the state and local tax deduction at $10,000. He said on Tuesday that he would lift that limit.

  • Share full article
Former President Donald J. Trump at a campaign event in Tucson, Ariz., last week.
Credit...Adriana Zehbrauskas for The New York Times

By Andrew Duehren

Reporting from Washington

Former President Donald J. Trump suggested on Tuesday that he would restore a deduction for state and local taxes, an expensive tax break that Mr. Trump and Republicans limited in a 2017 tax law.

In a post on Truth Social, his social media website, Mr. Trump said he would “get SALT back, lower your Taxes, and so much more.”

Writing ahead of a campaign appearance on Long Island on Wednesday evening, Mr. Trump appeared to be referring to the state and local tax deduction, or SALT, which Republicans capped at $10,000 to offset the cost of the tax cuts they passed in 2017. For Americans living in high-tax and largely blue states like New York and New Jersey, the move has been deeply unpopular. Both Democrats and Republicans in those states have promised to restore the full deduction.

But allowing Americans to discount their state and local taxes fully from their federal tax bills would be costly. The Penn Wharton Budget Model puts the cost at roughly $1 trillion in decreased revenue over 10 years, and much of the tax benefit would flow to higher-income Americans who pay a lot in state and local tax.

In recent weeks, Mr. Trump has announced a flurry of wide-ranging, loosely defined tax cuts, including no taxes on overtime pay, no taxes on Social Security benefits and no taxes on tips. Those ideas would come on top of Mr. Trump’s hope to extend expiring provisions of the 2017 tax law, which could cost roughly $4 trillion over 10 years, not counting extra interest costs. Mr. Trump has also said that he would want to cut the corporate tax rate to 15 percent for domestic manufacturers, though his aides have not explained the idea and experts have puzzled over how it would work.

The $10,000 limit on the state and local tax deduction is also set to expire after 2025.