Congress Should Reject Any Cap on SALT Deductions That Raises Costs on Families and Small Businesses

In Washington’s never-ending search for revenue, lawmakers are once again eyeing changes to the State and Local Tax (SALT) deduction for businesses. But make no mistake — eliminating or capping this deduction isn’t just an accounting adjustment. It’s a backdoor tax hike on American families, small businesses, and insurers, and conservatives in Congress should firmly oppose it.

For over half a century, the Treasury Department and Congress have rightly treated state and local taxes as legitimate business expenses — no different from employee salaries or inventory costs. These are not luxuries or loopholes; they are necessary costs of doing business. Removing the deduction means taxing companies on money they never earned, a clear violation of basic tax fairness.

The insurance industry would be especially hard-hit. Unlike other sectors taxed on net income, insurance companies are often taxed on gross premiums — that is, the total amount collected from policyholders — regardless of profitability. These “premium taxes” are already among the highest state-level taxes, often exceeding standard corporate income taxes. Eliminating deductibility would compound that burden, effectively raising the federal tax rate on insurers by as much as 7%.

That increase won’t be absorbed quietly. State law mandates that insurance companies pass along such costs to consumers. That means higher premiums for homeowners, small business owners, and families trying to protect their futures — all at a time when inflation and natural disasters are already driving prices up.

Furthermore, this policy doesn’t just hit “blue states.” Insurers serve customers in every state, and cannot simply pack up and move to a lower-tax jurisdiction. Whether it’s hurricane protection in Louisiana or wildfire coverage in California, families in every community will bear the burden of these misguided changes.

If Congress wants to support working families, promote economic stability, and strengthen small business resilience, it must preserve the full SALT deduction for businesses — especially in industries like insurance that are already overtaxed and overregulated. Eliminating this deduction would be a step backward for taxpayers and a quiet but dangerous expansion of federal taxation.

Conservatives should call this what it is: a stealth tax hike that punishes responsible businesses and raises costs for everyday Americans. Congress should reject any attempt to cap or eliminate the SALT deduction for businesses — and stand up for sound tax policy, free enterprise, and affordable insurance for all.