Overview

• The House approved a provision boosting the SALT deduction cap to $40,000 for taxpayers earning up to $500,000, with phased reductions for higher incomes.
• Senate Majority Leader John Thune has indicated SALT is not a top priority for senators, opening the door for amendments from moderates.
• Analysts warn the expanded cap would largely favor high-income households in states such as California, New York and New Jersey and could add over $600 billion to deficits by 2034.
• Advocates from blue states argue the relief addresses the imbalance where residents pay more in federal taxes than they receive in services.
• The broader legislative package pairs the SALT change with tax cuts and cuts to public healthcare programs to offset the bill’s overall cost.