U.S. Treasury Secretary Janet Yellin said she would work with Congress to lift the $10,000 federal cap on state and local property tax deductions.
Typically referred to as the SALT cap, the provision was tucked into the Trump-era federal tax cuts in 2017, and limits homeowners from claiming more than $10,000 in state and local taxes when filing their income taxes each year.
It’s been blasted by representatives from higher tax, typically Democratic states like New Jersey and neighboring New York, where the annual property tax bill could be upward of the federal cap.
“There are a lot of options that have been presented and I would work with you to try to ensure that the inequities that this caused are remedied in a fair and responsible way,” she said during a House Financial Services Committee hearing, in response to a question from Rep. Josh Gottheimer, NJ 5th District.
His district in particular encompasses Bergen County, which boasts some of the wealthiest towns in the nation. “There is a bipartisan proposal to repeal the cap,” Yellin continued.
The federal government could increase the cap, or outright repeal it, she suggested. A SALT cap repeal was not included in President Joe Biden’s $1.9 trillion COVID-19 relief plan.
House Democrats have tried since 2018 to have the cap lifted, but those efforts have been blocked in the previously Republican-led U.S. Senate.
And now, the top Senate position is held by Chuck Schumer, a Democrat from New York, which opponents say has felt some of the worst economic pain because of the SALT cap. New York and New Jersey, along with California and Connecticut, were slated to be the worst-hit by the SALT cap, according to a report from the Tax Foundation.
In 2018, the nonprofit Tax Policy Center estimated that completely repealing the SALT cap would cost the federal government $620 billion of tax revenue between 2018 and 2028.