Will the SALT cap expire? NJ official pushing for more money in your pocket

💲 The SALT (state and local taxes) cap has been limiting your tax deductions

💲 The cap is set to expire at the end of 2025

💲 It's possible the cap will be extended

The federal government has been saving tens of billions of dollars per year thanks to a limit on the amount of local and state taxes you can deduct from your federal tax liability.

But business leaders and officials say New Jerseyans can no longer afford to help with taking on the financial burden, and they want to make sure that the end of 2025 truly marks the end of the SALT cap that was enacted as part of a package of bills in 2017.

Since tax year 2018, SALT deductions have been capped at $10,000 for tax filers. In 2017, before the cap was in place, the average New Jersey family was taking an average annual deduction worth nearly two times that amount.

"If we restore SALT the way it was before 2017, millions of people in New Jersey will get an immediate tax cut — hardworking, middle-class families," U.S. Rep. Josh Gottheimer, D-N.J. 5th District, said during a press conference Monday morning in Ridgewood.

Gottheimer said the decision on what to do with the SALT deduction will be a "major battle" over the next 15 months in Washington, D.C. There are talks about extending the cap, or increasing it, instead of letting the limit expire completely.

Gottheimer has launched a SALT comment portal, for individuals in his district to submit their feedback on the SALT deduction's importance.

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Tom Bracken, president of the New Jersey Chamber of Commerce, said the current SALT cap penalizes citizens, and is driving people and businesses out of the Garden State.

"New Jersey shoots itself in the foot with state taxes," Bracken said. "What we do not need is the federal government to shoot us in the other foot."

After the enactment of the cap, the share of tax returns with SALT deductions fell to 11%, from close to 30% the year prior, according to the Peter G. Peterson Foundation.

Should the cap expiration occur as scheduled, related expenditures in one year from the federal government would increase from $23 million to nearly $140 million, the Foundation says.

The SALT deduction has existed since 1913.

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