Governor Hochul Proposes Tax Overhaul: What It Means for New Yorkers

New York Governor Kathy Hochul is stepping up to defend the wallets of hardworking middle-class families, boldly opposing the controversial tax break rule that she claims is stealing their hard-earned money. This isn’t just about tax codes; it’s about fairness for everyday Americans.

The state and local tax (SALT) deduction has become a hot topic in the financial landscape. This federal tax break allows filers who itemize to deduct up to $10,000 of certain state and local taxes from their taxable income. A penny saved is a penny earned, right?

But not in Hochul’s view. She argues that eliminating this deduction is crucial for providing real relief to middle-class families, echoing her commitment to making sure that those who work hard don’t have to sacrifice their financial security.

Why This Matters

Taxpayers face a choice between itemizing deductions or taking the standard deduction on their tax forms. For 2024, the SALT deduction limit allows a maximum of $10,000 for joint filers and just $5,000 for singles. Can you imagine the impact on families trying to make ends meet?

Critics of the SALT deduction cap argue that it disproportionately affects residents in high-tax states, like New York and California, where the cost of living is already a challenge.

The Key Takeaway

In her recent statement, Hochul voiced a clear message: New Yorkers deserve a complete repeal of the SALT cap. “The New York Republican delegation owes middle-class New Yorkers a full repeal of the SALT cap. This cap has cost New Yorkers as much as $12 billion every year since it took effect in 2018, robbing middle-class families of their hard-earned money,” she declared. “It’s time for Republicans to deliver. No excuses. No half measures. It’s all or nothing – New Yorkers deserve a full repeal.”

Originally put in place by Donald Trump with the Tax Cuts and Jobs Act in 2018, the SALT cap has drawn ire for its limitations, especially in high-cost states. The cap is set to expire at the end of 2025, but many are calling for immediate action.

While proponents argue that the cap boosts federal revenue and targets high-income earners, opponents stress that it punishes those living in areas with a higher cost of living—like New York.

Republicans are divided on the SALT deduction cap; those from high-tax states generally oppose it while others advocate for its continuation.

Voices from the Experts

Kevin Thompson, a finance expert and CEO of 9i Capital Group, highlighted: “The SALT tax cap was a political play by former President Trump aimed at high-tax blue states like New York and California. Removing this cap would greatly benefit residents in these areas, allowing them to deduct more of the taxes they pay.”

Financial literacy instructor Alex Beene added: “Since its inception, the SALT cap has ignited fierce debate. For states like New York, it has curbed deductions for countless taxpayers. Increasing or eliminating the cap would significantly ease tax burdens for millions of Americans. However, any changes should benefit taxpayers across all income levels, not just the wealthiest.”

What Lies Ahead

Thompson expressed optimism, stating that removing the SALT cap is a “real possibility,” especially with Trump campaigning on reversing the rule. The Senate would need to move quickly to repeal this cap through a budget reconciliation process, currently requiring 50 votes for approval, with Republicans holding a 53-seat majority.

“The real question remains: What will happen regarding the TCJA (Tax Cuts and Jobs Act)? Will they maintain the SALT cap and revert to lower standard deductions, or will they find a way to change the SALT cap?” Thompson speculated. “Only time will tell.”