As the Senate considers the One Big Beautiful Bill Act, blue state Republican House members are pledging to hold $4 trillion in tax relief hostage if the state and local tax or SALT deduction provision in the House-passed version is altered. The current language of the bill allows up to $40,000 in federal tax deductions for state and local tax expenses.
Capping the SALT deduction at $10,000 was a big achievement of the 2017 tax bill. SALT is a blue state giveaway that shields politicians in high-tax states from accountability. Eliminating it entirely would pressure these governments to reform their fiscal ways. Although the House-passed bill thankfully would prevent a massive tax hike on millions of Americans, this egregious provision must be fixed in the Senate.
SALT rigs the tax code in favor of the worst-managed states, forcing taxpayers in Florida and Texas to pick up the tab for New York City, Chicago, and San Francisco. This is simply unjust and antithetical to the very purpose of the tax code.
Under current law, taxpayers who itemize can deduct up to $10,000 of SALT from their federal taxable income, reducing their federal tax bill. Capping this giveaway was an important policy win of the Trump-Pence Tax Cuts and Jobs Act and paid for lowering the corporate tax rate.
But even with the current limits, taxpayers in fiscally responsible states are subsidizing bloated governments elsewhere. For high-income earners, this deduction reduces federal taxes owed by more than $400 for every $1,000 in state and local taxes paid.
Instead of being content with the wildly generous $10,000 deduction, the SALT Caucus demands a dramatic lifting of the cap — or else subject Americans to the trillions of dollars in tax increases in 2026.
Voters in places like California and New York continue to elect politicians who overspend and overtax in a vicious cycle that leaves American families picking up the tab. Constituents of the SALT Caucus should focus their energy on restoring fiscal sanity to their own states before asking Texas, Florida, and the rest of middle America to pick up the tab.
Unsurprisingly, before the cap was imposed in 2017, California and New York (population 59 million) received 33 percent of SALT benefits while less than 7 percent of such benefits went to residents of Florida and Texas (combined population: 55 million).
Thanks to SALT, Blue state residents pay thousands less in federal taxes per year. To illustrate a SALT deduction with a proposed $40,000 cap, consider two hypothetical families — one in New Jersey and one in Tennessee. Both are married with $400,000 personal income each year, spending $100,000 on consumer goods, with a residence worth $700,000.
The family in Tennessee family would pay $11,060 in state and local taxes per year, with a SALT deduction value of $3,539. The family in New Jersey would pay $36,920 in state and local taxes per year, with a SALT deduction of $11,814.
The SALT subsidy results in our Tennessee family paying a whopping $8,275 more in federal taxes than its counterpart in New Jersey. This family is funding public schools, roads, police, and fire not only in the Volunteer State but in the Garden State as well!
Millions of American families have left New York, New Jersey, and California for lower-tax states. Meanwhile, the SALT Caucus insists these political refugees fund the very, bloated governments from which they fled.
SALT subsidy proponents denounce repeal as a federal “revenue grab.” But making the current $10,000 SALT cap permanent would turbocharge the economy by providing nearly $1 trillion over the next decade for broad-based permanent tax cuts.
Rep. Mike Lawler (R-N.Y.) derides SALT repeal as “double taxation.” He is wrong on two counts. True double taxation occurs when one level of government taxes the same income twice, like corporate income taxes followed by dividend taxes, which both hit shareholders. But federal and state taxes are levied by two distinct sovereign entities with distinct constitutional roles providing distinct public services.
The only “double taxation” related to SALT is that it requires Tennessee taxpayers to foot the bill of their own state, plus a legion of big-spending Blue states.
Without the SALT deduction, taxpayers in high-tax states like New Jersey — burdened by public sector unions, corruption, and fiscal malfeasance — would feel the full weight of their states’ policies. Residents would surely demand lower taxes and smarter budgets.
Congress should prioritize job creators, investors, and workers rather than entrenched state bureaucracies. The tax code should reward innovation rather than reward egregiously high state and local taxes. It’s time to end — not expand — the SALT deduction.
Paul Teller is executive vice president of Advancing American Freedom, where Joel Griffith is a senior fellow.
