A popular tax break used in high-tax states like New Jersey would be capped at $40,000 — up from the $10,000 limit — under a deal reached over the weekend by Republicans in Washington.
The deal is part of President Donald Trump’s “Big Beautiful Bill,” which includes tax cuts, Medicaid reforms and border security funding. Trump’s bill passed a key first hurdle in the U.S. Senate by a narrow 51-49 vote, and lawmakers are aiming to complete work on the bill on June 30.
Under the agreement, the federal government would raise the cap from $10,000 to $40,000 on state and local property tax deductions, more commonly called the SALT deduction, for those earning up to $500,000 a year. The $40,000 cap would sunset in five years and then shrink back to $10,000.
There was no cap to the SALT deduction before a limit of $10,000 was imposed as part of the 2017 Tax Cuts and Jobs Act. Critics say the cap has targeted — and hurt residents in — often Democratic-leaning states with high property taxes, such as New Jersey, California and New York…
2017 tax bill increased other deductions
The 2017 tax bill also nearly doubled the standard deduction from $6,500 to $12,000 for individual filers and from $13,000 to $24,000 for joint returns, said the nonpartisan Tax Policy Center.
“What Trump and Congress did at that point was dramatically increase the standard deduction but decrease the amount you could deduct for state and local taxes,” said Marc Pfeiffer, a senior policy fellow at Rutgers University’s Bloustein School of Planning and Public Policy, who studies local government in New Jersey.
Northjersey.com, June 30, 2025