Reports suggest that President-elect Donald Trump is willing to consider increasing the SALT cap, a part of the tax law that significantly puts wealthy households in democratic-leaning states at a disadvantage.

Before the Tax Cuts and Jobs Act was enacted in 2017 during Trump’s presidency, taxpayers who detailed their deductions could subtract the amount they paid in state and local taxes (referred to as SALT) from their federal tax obligations.

Prior to 2017, there was no restriction on the amount that could be deducted. This allowed affluent individuals in states with high taxes that offer extensive government services to lower their taxable income for federal purposes by tens of thousands of dollars.

Trump’s bill made it so taxpayers could only deduct up to $10,000 worth of property, sales or income taxes paid to state and local governments.

This was a seismic shift for many citizens, and at the time, Democrats saw this as Trump retaliating against people in blue states that didn’t vote for him in the 2016 election. 

Before Trump’s tax reform, 91 percent of the benefits of the SALT deduction was claimed by California, New York, New Jersey, Illinois, Texas, and Pennsylvania, according to the Tax Foundation. 

But now, after a recent meeting with House Republicans from New York, California and New Jersey, Trump is said to be open to raising the cap from $10,000. Trump made huge gains in all three of those states in the 2024 election.

Representative Mike Lawler of New York, who attended the Saturday gathering at Mar-a-Lago in Palm Beach, Florida, said Trump ‘is fully supportive of raising the cap.’

Representative Nicole Malliotakis, also of New York, told The New York Post that Trump ‘wants to kill’ the SALT cap.

‘He said that he understands the plight of New Yorkers who are being abused by our mayor and our governor who treat them like ATMs, and he wants to provide SALT relief,’ Malliotakis said. ‘We need to work out what that number is going to be.’

What the president-elect isn’t open to, according to the reporting, is completely getting rid of the cap.

Bloomberg reported that Trump’s economic advisers have discussed expanding the cap to $20,000. 

The apparent reason Trump is against lifting of the cap is that his administration wants to do more tax cuts that would need to be offset.

Some of the tax cuts Trump discussed on the campaign trail included removing income taxes on tips, Social Security benefits and overtime pay.

Lifting the SALT cap is unpopular with some conservative Republicans from lower-tax states, who again argue it disproportionately benefits taxpayers in Democratic states.

‘Why should people in South Carolina subsidize California and New York tax policy? You’re going to have a hard time with me on that,’ Republican Senator Lindsey Graham of South Carolina said last week on Fox Business.

Lawler hit back at Graham, arguing in his own appearance on Fox News that South Carolina is ‘one of the biggest recipients of federal dollars in comparison to other states by a percentage.’

Trump will be coming into office on January 20 with an extremely narrow GOP margin in the House, with Republicans controlling 219 seats and Democrats holding 215.

This will soon drop to 217-215 after two lawmakers join the incoming Trump administration. 

This means he’ll almost certainly have to continue negotiating with Republicans who support raising the SALT cap if he wants to pass another large-scale tax cut.

Over the last four years, Democrats have made several attempts to get rid of or raise the SALT cap.

Their first try came in 2021, when the House passed the Build Back Better plan. The bill rose the cap to $80,000 until 2031 but it failed in the Senate.

A collection of blue states – including New York, Connecticut, Maryland and New Jersey – also mounted a legal challenge against the part of Trump’s tax bill that contained the SALT cap.

The states argued that the cap improperly encroached on their taxing ability.

In April 2022, the Supreme Court declined to hear the case and didn’t offer a reason why.