Republican members of New York’s congressional delegation have split over a deal to increase a tax deduction — the latest step in an intra-party dispute that could stall President Donald Trump’s fiscal agenda.
Members of the House Ways and Means Committee on Wednesday approved a tax code overhaul sought by Trump. Republicans hope it will be incorporated into a “big, beautiful bill” that includes several campaign promises, including eliminating the income tax on tips. The tax overhaul will be combined with cuts to spending on Medicaid and food assistance programs.
It also increases federal tax deductions for people who pay state and local taxes, a provision known as SALT. But a handful of blue-state Republicans — including New Yorkers — say the changes don’t go far enough, and they won’t get on board with the bill unless it raises the SALT cap further.
“It's an issue of double taxation and fairness,” said U.S. Rep. Mike Lawler, a Republican from Rockland County who is considering a run for governor. “Given our tight margin, we have a voice in the process and we're going to use it.”
Until 2018, people who filed federal income tax returns could write off whatever they paid for their local property taxes as well as state and local income taxes. That means they wouldn’t need to pay federal income taxes on that sum of money, often yielding thousands of dollars in savings.
Trump’s 2017 tax law lowered overall rates, but it also capped this deduction at $10,000. The new cap hit hardest in high-cost suburbs — where expensive houses come with big property tax bills — in states that also charge their own income tax, like New York.
For example, the median 2023 property tax bill in Westchester County was over $15,000, according to the property data firm Cotality. New York’s budget division estimates the SALT cap cost taxpayers a total of $12 billion in 2018.
“We're not gonna fleece hard-working New Yorkers, certainly at a time when Albany continues to tax and spend like there's no tomorrow,” Lawler said. “I will not support a bill that doesn't provide real and lasting tax relief.”
House Speaker Mike Johnson met late Tuesday with Lawler and other SALT-focused members, hoping to forge a deal. The bill that advanced on Wednesday includes a potential compromise. The cap on deductions would rise to $30,000 and apply to people reporting less than $400,000 of income.
Rep. Nicole Malliotakis, a Republican from Staten Island, voted to bring the bill out of the tax-writing Ways and Means Committee. She said the thresholds in the bill would apply to 98% of her constituents.
“ I'll be able to go home and tell everyone that I was able to triple their deduction,” she said in the committee room. “Those who want unlimited [deductibility] … that will support the millionaires and the billionaires. That's not who we're fighting for. The Republicans are fighting for the working class.”
Other SALT holdouts include Reps. Nick LaLota and Andrew Garbarino of Long Island. Rep. Elise Stefanik, who represents northern New York, joined those men last week in a statement rejecting the $30,000 cap as “insulting.”
But restoring the SALT deduction will cost the federal government money at a time when other members hope to cut taxes elsewhere. Both Lawler and Johnson said they will continue to have meetings in the coming days.
