During his campaign, President-elect Donald Trump vowed to lift the controversial $10,000 state and local tax deduction cap (SALT) Congress instituted in 2017.
“I will turn it around, get SALT back, lower your taxes, and so much more,” Trump said on Truth Social, his social media platform.
The cap has been in place since Trump's first term as president, when he signed into law the sweeping tax cuts of 2017, which limited SALT deductions to $10,000. Pundits alleged the cap targeted Democratic-leaning states with high state income and property taxes, including New Jersey, New York, Oregon, Connecticut and California.
Now that Trump has won his second term in the White House by defeating Vice President Kamala Harris, both investors and advisors in high tax states are wondering if the president-elect will follow through on his promise.
Deloitte’s Washington national tax practice executives—Policy Group Leader Jon Traub and Deputy Leader Anna Taylor—both spoke on the matter during Deloitte’s “Post-Election Media Briefing: 2025 Tax Policy Outlook” webcast today.
The policy experts said they believe Trump and his surrogates will work to increase the SALT cap as part of fast tracking a bill to extend the 2017 tax cuts that are expiring at the end of 2025. At the same time, the president-elect’s other tax promises, including abolishing taxes on tips and overtime and making Social Security benefits tax free, will have to be factored in, Traub said.
“I don’t think we solve this TCJA [Tax Cuts and Jobs Act] extension without dealing with SALT in some way and given the narrow margins in the House, I think it’s almost impossible that you don’t see members demanding something higher than a $10,000 cap,” Traub said.
“There is very little doubt there in my mind that a small group of Republicans who want a more generous SALT cap will band together in the House and say, ‘We will not vote for a $10,000 SALT cap.’ The question then becomes how much SALT will they demand, because anything over $10,000 will be a revenue loser,” he said.
That strategy, however, isn’t foolproof. Push back from some Republicans in low-tax states, the sheer cost of increasing the cap, as well as the vehicle the GOP plans to use to get the tax cuts over the finish line, will all be factors in any SALT cap increase.
Cost alone may be one of the biggest impediments to any major SALT cap increase and will need to be factored into the overall tax package, Taylor said.
At the end of the day [Trump’s tax wishlist] will add trillions of dollars more” to a package that is already being estimated to cut $9.7 trillion from federal revenues over the next 10 years, according to the nonpartisan Committee for a Responsible Federal Budget, she added.
However, since no official tax package has been presented nor scored yet, keeping some SALT cap in place and adding tariffs—both of which reduce the cost of the proposed tax cuts—are important factors, Traub noted.
To keep costs down, Trump and congressional leaders are likely to make the tax package “shorter and skinnier” to reduce costs, Traub said. “I’m guessing any changes will be for three to five years,” he said.
Procedurally, if Republicans try to get the tax cuts done through budget reconciliation, they will need to decide on a revenue impact up front and then make the policy pieces fit, Traub said.
The reconciliation process allows the GOP leadership in the Senate to avoid needing to get 60 votes. Currently, Republicans have won 53 seats in the Senate, to Democrats’ 47 seats.
“For all of those reasons, it’s not a simple process. It’s not an easy process. But I do think they can do a lot of what they want to do on the tax front through this tool [of reconciliation],” Taylor said.