Speaker Mike Johnson (R-La.) and moderate Republicans have zeroed in on an agreement for the state and local tax (SALT) deduction cap, three sources told The Hill, solving a critical hang-up that has dogged the party’s “big, beautiful bill.”
The proposal would increase the SALT deduction cap to $40,000 — quadruple the current $10,000 cap — for individuals making $500,000 or less in income, three of the sources said. One source said the level would increase 1 percent a year over 10 years.
That marks an increase from the $30,000 cap with a $400,000 income cap currently in the bill — a provision that SALT Caucus members vehemently rejected. The House Rules Committee is scheduled to convene at 1 a.m. Wednesday, during which the panel will consider changes to the bill.
While several members of the SALT Caucus are supportive of the plan, according to sources, Johnson will need to sell the proposal to hardline conservatives — including many in the House Freedom Caucus — who have been resistant to a significant hike to the deduction cap.
Exiting a meeting in the Speaker’s office Tuesday night, members of the SALT Caucus said they did not yet have a firm deal, but signaled significant progress.
“We weren’t even in the same universe a couple of days ago. We’re on the same ballfield now,” Rep. Nick LaLota (R-N.Y.) told reporters.
Still, the agreement between Johnson and the SALT Caucus is a massive step forward in passing the party’s “big, beautiful bill.” The Speaker and moderate Republicans from high-tax blue states struggled for weeks to find consensus on the critical — yet tedious — issue, trading proposals behind closed doors.
Rep. Elise Stefanik (R-N.Y.) — who is considering a run for governor — stepped in to become a more active part of negotiations after unexpectedly withdrawing from her United Nations Ambassador nomination. Sources said that she had told Johnson that he had to move on the $30,000 figure, which she had said was “insulting” in a joint statement with fellow SALT-focused New Yorker Republican Reps. Mike Lawler, Andrew Garbarino, and LaLota.
Stefanik, though, notably did not join a statement with five core SALT Republicans on Tuesday following Trump’s visit with House Republicans on Capitol Hill.
Trump had told lawmakers earlier on Tuesday to “let SALT go,” signalling support for the $30,000 cap and telling reporters that it would benefit “Democrat governors.” He took specific aim at Lawler, one of the most outspoken about making greater changes to the SALT deduction.
Lawler held the line in the immediate aftermath of Trump’s speech, saying he was “not budging.”
But later in the day, after SALT Caucus meetings in the Speaker’s office, Lawler said GOP leaders have floated “an improved offer” to members of the SALT Caucus, and the lawmakers were waiting for cost estimates to arrive from the Joint Committee on Taxation.
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