New York politicians, Lawler and Hochul, trade barbs over SALT deduction in Trump's budget bill

(The Center Square) — New York's political leaders are trading barbs over a provision in President Donald Trump's "big, beautiful" budget bill that increases the SALT deduction, with Republicans praising the move as a tax cut and Democrats blasting them for not lifting the tax exemption.

Tucked into the budget reconciliation bill approved by the House of Representatives this week is a provision that would increase the SALT deduction cap to $40,000 — quadruple the current $10,000 cap — for individuals making $500,000 or less in income for the next 10 years.

Congressman Mike Lawler, who lobbied President Donald Trump to increase the cap, touted the provision of the House budget as a tax cut for New Yorkers struggling to stay afloat financially.

"We’re quadrupling the current cap on SALT, bringing much-needed relief to families in the Hudson Valley and across who are besieged by some of the highest taxes in the country, thanks to Kathy Hochul’s feckless leadership," Lawler, a Republican, posted on X.

However, New York Gov. Kathy Hochul, who has called for a full repeal of the SALT cap, is accusing Lawler and other GOP members of the state's congressional delegation of "caving" to the president's agenda.

"With the passage of this budget, the Republican delegation tore up SNAP benefits, slashed funding for affordable housing, killed clean energy projects and enacted the largest Medicaid cut in history — and they did it all while still managing to roll over on the SALT cap," the Democrat said in a statement.

But Lawler fired back in a blistering social media post that called Hochul "completely incompetent" and pointed out the Democrats could not lift the SALT exemption when they were in control in Congress four years ago. He also faulted Hochul for increasing spending in the New York state budget, as she criticizes the federal spending plan.

"New York has the highest taxes in the nation, the worst business climate, and we lead the nation in outmigration. Your response: increase state spending by billions and raise taxes on small businesses once again in the state budget," he wrote on X. "Get your house in order."

Lifting the SALT cap has been a key priority for New York Republicans and Democrats, who say it disproportionately hurts taxpayers in blue states like New York, New Jersey and Massachusetts, where property and state income taxes are relatively high. In January, GOP lawmakers met privately with Trump at Mar-a-Lago to make their pitch for raising the cap.

SALT allows taxpayers to deduct some of what they owe in state and local taxes from their federal tax return. The deduction was previously unlimited, but it was capped at $10,000 as part of Trump's 2017 Tax Cuts and Jobs Act.

The cap has cost New Yorkers up to $12 billion a year since it took effect in 2018, according to federal and state data. A 2021 report by the Committee for a Responsible Federal Budget said repealing the SALT cap would cost the federal government about $900 billion.

Lawler and other Republicans have filed a bill that calls for lifting the cap on SALT to $100,000 for single filers and $200,000 for married couples. The cap is set to expire on Dec. 31, absent action by Congress.

The back-and-forth between Hochul and Lawler could be a preview of the next gubernatorial election, with the Hudson Valley Republican weighing a potential challenge to the incumbent Democrat in the 2026 elections.