New York Governor Kathy Hochul is making a bold stand against a tax rule that she says unfairly takes money from middle-class families. The issue? The state and local tax (SALT) deduction—a federal tax break that allows taxpayers to deduct up to $10,000 of certain state and local taxes from their taxable income.
Hochul wants this deduction to go away, saying that it’s time for middle-class families to finally get the relief they deserve. In a statement released Thursday, she made it clear: the rule is hurting everyday people in New York.
Why Should You Care?
Some taxpayers, instead of taking the standard deduction, can benefit from itemizing their taxes. For 2024, the maximum SALT deduction is $10,000 for married couples filing jointly, and only $5,000 for single filers.
Critics argue that this cap is especially tough on residents of high-tax states like New York and California. They say it disproportionately targets people who live in states with high taxes, making their tax burden heavier.
Hochul’s Call for Change
Hochul isn’t holding back. She’s calling for a full repeal of the SALT cap. She even pointed out that since the rule took effect in 2018, it’s cost New Yorkers up to $12 billion a year. That’s money coming straight out of people’s pockets.
Hochul’s message is clear: “The New York Republican delegation owes middle-class New Yorkers a full repeal of the SALT cap. No excuses, no half measures. It’s time to make it right.”
The cap was originally introduced by Donald Trump as part of the Tax Cuts and Jobs Act in 2018, replacing the previous unlimited deduction for state and local taxes. Right now, the cap is set to expire at the end of 2025.
The Debate Around the SALT Cap
Supporters of the SALT cap argue that it helps increase federal revenue and only affects high-income earners. But critics say it’s unfair—especially in states with higher living costs and taxes like New York.
Republicans are divided on this issue. Some lawmakers from high-tax states oppose the cap, while others believe it’s necessary for the government to enforce.
What Do Experts Think?
Finance expert Kevin Thompson, CEO of 9i Capital Group, explains that the SALT cap was a political move aimed at high-tax blue states like New York and California. He believes that removing the cap would help people in these states by allowing them to deduct more of their state and local taxes.
Alex Beene, a financial literacy instructor, agrees that the cap has been particularly harsh on states like New York. He suggests that either raising the cap or getting rid of it would help millions of Americans with their tax bills. But he also stresses that any changes should benefit taxpayers across all income brackets.
What’s Next?
Could the SALT cap be eliminated? Thompson says it’s possible, especially since former President Trump campaigned on undoing the rule. To make this happen, the Senate would need to go through a budget reconciliation process, which would require 50 votes for approval. Republicans currently have a 53-seat majority, so it’s still up in the air.
Thompson says the big question now is whether lawmakers will remove the cap and bring back lower standard deductions or leave things as they are. Only time will tell!