Republicans Wednesday were closing in a on deal to raise the cap on deducting state and local taxes, or SALT, to $40,000 a year, a key breakthrough that would boost passage of President Trump’s sprawling budget bill.
Although the deal is not done yet, House Speaker Mike Johnson and a group of GOP lawmakers, mostly from the New York suburbs, reportedly say they agreed to the basic parameters.
“We’re on the same ballfield now,” Long Island Rep. Nick LaLota (R-N.Y.) told reporters as he left a meeting with Johnson late Tuesday night.
The agreement would raise the cap to $40,000 from the current $10,000. The cap was imposed by Republicans in Trump’s 2017 tax cut that Johnson is seeking to extend in the megabill dubbed the One Big Beautiful Bill that includes more deep tax and spending cuts.
If the bill fails, the SALT cap would expire altogether, a fact that the suburban lawmakers believe gives them leverage in the talks that have dragged on for several weeks.
The tentative new deal would reportedly allow anyone making less than $500,000 a year to claim the SALT deduction but would not be doubled for married couples, a key demand that the suburban lawmakers have apparently now backed away from.
The new SALT cap would be permanent with all caps and limits increasing by 1% a year for the first 10 years, reports say.
Congressional leaders cautioned that Johnson still needs to win approval for the deal from a separate group of right-wing fiscal hardliners who oppose raising the SALT cap because it increases the cost of the entire megabill.
Several Republicans, including LaLota and Westchester County Rep. Mike Lawler, ran for reelection on platforms that called for eliminating the SALT cap completely.
Trump endorsed that stand at a MAGA rally on Long Island during his 2024 presidential campaign. But he has now flip-flopped and warned Lawler to end the revolt and get behind the bill at a meeting on Capitol Hill this week.
The holdout GOP lawmakers represent affluent districts in high-tax blue states including New York, New Jersey and California, and could face fierce blowback from constituents for failing to eliminate the SALT cap altogether.
Democrats are already slamming the Republicans for not standing firm on SALT, with House Minority Leader Hakeem Jeffries predicting the Republicans would “fold like a cheap suit.”
Non-partisan analysts say the SALT deduction disproportionately benefits the wealthy. But suburban lawmakers in both parties argue that middle-class taxpayers need the benefit to make ends meet with state, local and property taxes all soaring.
