New congressional bill aims to abolish $10,000 maximum on tax deduction

On Friday, April 15, congressman Andrew Garbarino (NY-02) introduced H.R. 2555, The Securing Access to Lower Taxes by ensuring (SALT) Deductibility Act  bill, to the first session of the 118th Congress to amend the Internal Revenue Code of 1986 to repeal the limitation on the deduction for certain taxes, namely state, local property, and income taxes.

The SALT Act (State and Local Tax), enacted over 150 years ago, allowed taxpayers to deduct state and local taxes paid from their federally taxable income.

The 2017 Tax Cuts and Jobs Act (TCJA) capped the deduction maximum to $10,000 per year through 2025.

Garbarino’s district on Long Island has been heavily affected by the 2017 measure as property taxes in Suffolk County average well above the $10,000 threshold at approximately 2.24 percent of fair market assessed value of a home (i.e., nearly $12,000 on a $500,000 property).

The bill would apply to the taxable year beginning after Dec. 31, 2022.

Garbarino had strong bipartisan support of the bill, with Democratic and Republican congressional members from New Jersey, New York, California, Illinois, Minnesota, and Massachusetts.

The announcement, made in Franklin Square in Nassau alongside cosponsors congressman Anthony D’Esposito (R-NY-04) and Nick Lalota, specified that the “The bipartisan bill would allow taxpayers to fully deduct their state and local taxes on their federal income returns.”

“The SALT deduction cap has devastated my community by placing an unfair financial burden on Long Islanders and on taxpayers across the country,” said Garbarino. “Long Islanders pay some of the highest property taxes in the country and, for the hardworking middle-class families in my district, the $10,000 cap means they are only able to deduct a fraction of what they pay from their federal income taxes.”

The initial purpose of the SALT deduction, when it was first implemented more in various iterations in the 1860s, was to prevent imposing federal taxes on top of state and local taxes already paid.

“Already overtaxed Long Islanders are being forced to suffer under the current SALT cap, which is why I joined the bipartisan effort to repeal the cap as vice chair of the congressional SALT caucus,” said D’Esposito. 

“New York has the dubious distinction of leading the country in two related categories: (1) out-of-state migration; and (2) property, income, and sales tax burden—which at 12.47 percent, is the nation’s worst, “ said LaLota. “I am proud to cosponsor the SALT Deductibility Act to provide relief for families across Long Island. I am committed to doing whatever must be done to put more money in Long Islanders’ pockets, lower their tremendous tax burden, and help keep Long Islanders on Long Island.”