House Speaker Mike Johnson and a group of blue-state Republicans have reached a critical but tentative deal to boost the cap on state and local tax deductions to $40,000 in the GOP megabill, according to three Republicans with direct knowledge of the private agreement.
The new deduction cap, which would be per household, will be limited to taxpayers making below $500,000. Under the tentative deal, the income cap and the deduction will grow 1 percent every year over a ten-year window. The deduction stays in place after the 10-year window and doesn’t snap back to previous levels.
President Donald Trump is expected to endorse the SALT agreement.
However, GOP hard-liners and fiscal hawks who deeply oppose a higher SALT cap boost still need to sign off on the measure. Johnson is running through the matter with other House GOP factions. And SALT caucus members Tom Kean of New Jersey and Young Kim of California, who are in the higher income districts, are also waiting to sign off.
But the tentative deal is a major step forward for House GOP leadership in advancing their marquee border, energy, defense and tax package. A small contingent of New Jersey, California and New York Republicans have threatened to block the package if it doesn’t include a significant boost to the deduction, otherwise known as SALT.
The cap on the deduction under current law is $10,000. The House Ways and Means Committee had already passed tax legislation that included a $30,000 cap with an income cap of $400,000, but the SALT Republicans lambasted the proposal as insufficient.
GOP Rep. Elise Stefanik of New York visited the White House Tuesday on the matter.
The House Rules Committee is set to open debate on the legislation at 1 a.m. Wednesday so that Republicans have a shot at putting the bill on the chamber floor on Wednesday or Thursday.
Mia McCarthy contributed to this report.
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