SALT Caucus and GOP leadership reach tentative deal in win for tax bill
The SALT Caucus and Republican House leadership have reached a tentative agreement to raise the limit on state and local tax (SALT) deductions from $10,000 to $40,000. This deal, which comes ahead of a crucial House Rules Committee vote on a significant $4 trillion tax-cut and spending bill, is aimed at gaining support from Republican members, particularly those from blue states. However, the higher deduction cap is restricted to filers with incomes below $500,000 and is designed to be permanent.
The agreement is seen as a win for blue-state Republicans,such as Rep. Mike Lawler, who have been advocating for increased SALT deductions. It also represents a strategic victory for House Speaker Mike Johnson as he navigates internal divisions and seeks to pass legislation that bypasses the filibuster using reconciliation. While the compromise improves upon the original proposal,it remains a point of contention among rank-and-file Republicans,who are concerned about the perception that it primarily benefits wealthier taxpayers in Democratic states. The overall passage of the bill still faces hurdles, particularly from fiscal conservatives and centrists within the party.
SALT Caucus and GOP leadership reach tentative deal in win for tax bill
Members of the SALT Caucus and Republican House leadership have agreed to a compromise on raising the cap on state and local tax deductions, a breakthrough for the GOP as it tries to pass its $4 trillion tax-cut and spending bill.
The compromise, agreed to Tuesday night ahead of a key vote on the legislation in the House Rules Committee, would raise the cap on SALT deductions from $10,000 to $40,000, according to multiple reports, but limit the deductions to filers with incomes under $500,000. The higher cap would be permanent, unlike the existing cap, which is set to expire at the end of this year.
The agreement is a win for blue-state Republicans who’ve been pushing for a higher cap, such as Rep. Mike Lawler (R-NY), who has lobbied hard for more SALT deductions and is a possible 2026 gubernatorial candidate in New York. Others include Reps. Nick LaLota (R-NY), Young Kim (R-CA), Andrew Garbarino (R-NY), and Tom Kean Jr. (R-NJ).
It is also a boost for House Speaker Mike Johnson (R-LA), who has been grappling with three main factions of holdouts to the Republican fiscal bill being passed through reconciliation, a legislative process that allows bills to bypass the filibuster and pass with only a simple majority in the Senate.
The small size of the Republican majority and the political necessity of passing the legislation, which President Donald Trump and Republicans have dubbed the “one big, beautiful bill,” have allowed small groups of lawmakers to band together and exact concessions.
The SALT agreement is an increase from what the House Ways and Means Committee approved during its markup. The version of the bill approved by the panel would increase the $10,000 SALT cap to $30,000 for married couples and set an income limit of $400,000. While the proposal would have tripled the SALT cap, the SALT Republicans remained steadfast and maintained that $30,000 was too low.
The only member of the SALT Caucus on the Ways and Means Committee is Rep. Nicole Malliotakis (R-NY). She publicly endorsed the $30,000 cap offer during the markup and has not been a prominent part of SALT negotiations since, compared to the likes of Lawler and LaLota, who were frequent visitors to Johnson’s office.
Still, the compromise is a step down from what members such as Lawler had been pushing in recent days. They had asked for a $62,000 cap for individuals and a $124,000 cap for joint filers.
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The caveat with the SALT cap, though, is that raising it is unpopular among rank-and-file Republicans, who have noted that it largely benefits wealthy taxpayers in Democrat-led states. The Tax Policy Center found that the highest-income 20% of households would receive more than 96% of the tax cut if the cap were fully repealed.
Overall, the tentative agreement is a major development for House Republicans, although they still have to win the votes of fiscal hawks in the party who are worried that the bill would add too much to the debt and centrists who are wary of cuts to Medicaid and food stamps.
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