The state and local tax (SALT) deduction has become one of the most discussed tax provisions in recent U.S. policy debates. For taxpayers—especially those in high-tax states—the fate of the SALT deduction can directly impact the amount owed come tax season. With new legislation under consideration in 2025, it’s important to stay informed about proposed changes, potential impacts, and what experts and lawmakers are saying.
The SALT deduction allows taxpayers to deduct state and local taxes paid from their federal taxable income. This includes property, income, and sales taxes. The deduction has been a key element in the federal tax code, but its cap since 2018 has created debate. The intention behind capping the deduction was to simplify the tax code and increase federal revenue. However, this cap predominantly affected residents of states with higher taxes.
In 2025, lawmakers are once again considering changes to the SALT deduction. The debate centers around whether to lift the deduction cap or keep it in place. According to CNN Politics, some members of Congress, especially from New York and other high-tax states, are strongly opposing the current wording of tax legislation. They argue that if the SALT deduction remains capped, it could hurt constituents by increasing their tax bills.
Meanwhile, CNBC reports that the deduction’s future is in limbo. The article explains the provision’s significance and why lawmakers are divided over possible reforms. The House is advancing President Trump’s new tax bill, but major points—including the SALT deduction—are still unresolved.
If the cap on the SALT deduction is removed or raised, taxpayers in states with higher property and income taxes could see reduced federal tax liabilities. However, maintaining the cap would likely mean higher federal taxes for these same individuals. The outcome will depend on ongoing negotiations and the final shape of new tax legislation.
Staying informed is crucial. Monitor reputable news sources and official government updates for any changes. If you’re unsure how the SALT deduction affects your situation, considering consulting a tax professional. For additional, in-depth reporting, see the CNN Politics analysis and the CNBC update.
The SALT deduction remains a pivotal issue in current U.S. tax policy. While the debate continues in Congress, understanding what’s at stake will help you plan and advocate for your interests. Keep following the conversation and be proactive in your tax planning for 2025.