Lawmakers from high-tax states, including New Jersey, are making another push to eliminate the cap on the federal deduction for state and local taxes with a new bipartisan effort.
The tax break, commonly called the SALT deduction, was capped at $10,000 for some taxpayers and eliminated entirely for others starting with the 2018 tax year.
U.S. Reps. Josh Gottheimer, D-5th Dist., and Rob Menendez, D-8th Dist., announced the new measure, co-sponsored by nearly 50 representatives from mostly high-tax states, at a Thursday press conference in Paramus.
“Now more than ever, we need to restore the SALT deduction, lower taxes, and make life more affordable for Jersey families,” Gottheimer said.
“Every time I’m in a Jersey diner, I hear about SALT, lower taxes, and affordability — from teachers, police, nurses, and firefighters,” he said. “Today, with members from across the country and political spectrum, we’re taking concrete action to help make life more affordable for millions of hardworking Jersey families.”
At least 10 of New Jersey’s 12 representatives signed on to the bill.
Rep. Bill Pascrell, D-9th Dist., told NJ Advance Media he first wants to know how it will be funded.
“I am not ready today to sign onto legislation that is not at least partially paid for and will continue working with bipartisan committee colleagues on this priority,” said Pascrell, a member of the House Ways and Means Committee. “We need to get this right. Every day I know New Jerseyans are being hosed and want this cap smashed.”
Rep. Jeff Van Drew, R-2nd Dist., did not immediately respond to requests for comment.
The current deduction is limited to $10,000 for individual taxpayers earning less than $100,000 and for married taxpayers who file a joint return and earn less than $200,000. Unless lawmakers act, the provision won’t expire until end of 2025, when SALT will be fully deductible. The deduction was capped starting with the 2018 tax year after the passage of the Republican Tax Cuts and Jobs Act, leading to a nonstop push and pull between legislators from high-tax states such as New Jersey, New York and California and those who represent residents in states with lower taxes.
While efforts to restore the tax break have so far been unsuccessful — the House passed legislation four times since 2019 to restore deduction but the Senate did not take up the measures — the 2022 election sent more Republicans from high-tax states to Washington, D.C., leading to more support for action on SALT.
“It’s not only Democrats that back this bipartisan bill — it’s also supported by enough Republicans in Blue States to block Red State attempts to gut SALT further and prevent it from coming back,” Gottheimer said.
So far, eight House Republicans have signed onto the bill.
Earlier this year, Rep. Mikie Sherrill, D-11th Dist., introduced a bill that would increase the deduction until the 2025 limits expire.
Some 80% of those who would benefit from lifting the SALT cap had an average income of $216,000 or less, according to the progressive Institute on Taxation and Economic Policy. It said that 30% of New Jerseyans would get a tax cut, more residents than in any other state.
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Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on Twitter at @KPMueller.