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12h ago

House Republicans Reach Tentative Deal to Raise SALT Deduction Cap

Speaker Mike Johnson brokers agreement to increase the SALT cap to $40,000 for incomes under $500,000, but fiscal conservatives' approval remains uncertain.

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WASHINGTON, DC - MAY 21: Speaker of the House Mike Johnson (R-LA) arrives to a House Rules Committee meeting on the One Big Beautiful Bill Act at the U.S. Capitol on May 21, 2025. The House Rules Committee is holding a late-night meeting to debate President Trump’s tax and economic reform package as House Republicans attempt to bring the bill to the floor later this week for a vote. (Photo by Kevin Dietsch/Getty Images)
Photo: Nathan Posner/Anadolu via Getty Images

Overview

  • The proposed deal would raise the SALT deduction cap from $10,000 to $40,000 for taxpayers earning $500,000 or less, with a 1% annual phaseout over ten years before becoming permanent.
  • The agreement is a significant concession to blue-state Republicans, who argue that SALT relief is critical for constituents in high-tax states like New York, New Jersey, and California.
  • Speaker Mike Johnson and GOP moderates finalized the proposal, but it still requires approval from fiscal hardliners in the House Freedom Caucus before advancing.
  • President Trump has urged Republican holdouts to unify behind the bill, emphasizing its importance to his legislative agenda and the party's electoral prospects in 2026.
  • The deal fits within the $350 billion budget reconciliation limit but has drawn criticism from conservatives concerned about its impact on the federal deficit.