New York Republican Seeks to Hike SALT Cap Amid Debt Limit Talks

A New York Republican is pitching legislation to hike the state and local tax deduction, the latest in the GOP from a high-tax blue state to do so.

Rep. Nick LaLota (R-N.Y.) will introduce the SALT Fairness and Deduction Act, which would raise the current $10,000 cap to $60,000 for single filers and $120,000 for joint-filers in the coming days. LaLota would like to see a tweak to the limitation included in ongoing debt limit negotiations, according to his office.

New York, New Jersey, and California Republicans have been ramping up efforts to expand the deduction—an issue often championed by Democrats, who have failed in recent years to lift the cap. The $10,000 limit was enacted in the 2017 tax law as a way to pay for a swath of individual and corporate tax cuts, but has drew opposition from Republican members from blue states ever since.

Now, there are enough Republicans currently against the $10,000 cap to stymie any efforts to make the 2017 law permanent. While some are still pushing to nix the cap altogether, others, like LaLota, are looking to make tweaks that are less costly than an unlimited deduction, but also offer a larger break. LaLota says his bill would ultimately reduce the deficit, because the $10,000 cap is set to expire in 2025.

LaLota is having conversations with colleagues who also may support including SALT in debt limit negotiations, according to his office.

New York Republicans have splintered on whether the tax break should be brought up in debt limit talks, agreeing, though, that they wouldn’t sink a debt limit solution if it didn’t include a fix to the cap.

Rep. Mike Lawler (R-N.Y.), another freshman Republican who will face a competitive reelection race in 2024, has said he would support “any effort” to ensure the SALT cap is lifted, including during debt limit negotiations, while Rep. Nicole Malliotakis (R-N.Y.) told Bloomberg Tax that the issue should be taken up after the debt limit.

“We want to do the debt limit and then some tax provisions after,” Malliotakis said at the end of April.

LaLota’s bill adds to the growing list of SALT cap tweaks on the table. Reps. Mike Garcia (R-Calif.), Jimmy Panetta (D-Calif.), Josh Gottheimer (D-N.J.), and Andrew Garbarino (R-N.Y.) have all introduced bills to lift the cap altogether. Lawler has also backed legislation to raise the cap to $100,000 and another bill to double it to $20,000 for joint-filers.