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2d ago

House GOP Deadlocked Over SALT Cap as $4 Trillion Tax Bill Hangs in Balance

Republican leaders struggle to reconcile demands from high-tax state representatives and fiscal conservatives, threatening the passage of their sweeping tax and spending package.

Republicans in expensive blue states like New York and California are fighting for a larger SALT deduction in ongoing tax bill negotiations.
Congress’ effort to permanently cap how much of the taxes paid to state and local governments can be written off federally does not fall along party lines.
Mike Lawler and Elise Stefanik (AP)
The U.S. Capitol Building during sunrise on Sept. 5, 2024, in Washington, D.C. (Anna Moneymaker/Getty Images/TNS)

Overview

  • The GOP's proposed tax bill raises the SALT deduction cap from $10,000 to $30,000, with a phase-out for incomes above $400,000, but this fails to satisfy key factions within the party.
  • High-tax state Republicans, led by Reps. Mike Lawler and Jeff Van Drew, demand a higher cap or full repeal, citing the burden on their constituents in states like New York and New Jersey.
  • Fiscal conservatives oppose further increases, arguing that eliminating the cap entirely could add over $1 trillion to the federal deficit over the next decade, per the Penn Wharton Budget Model.
  • The slim Republican House majority of 220-213 means leadership cannot afford more than a few defections, putting the entire $4 trillion tax and spending package at risk.
  • The SALT cap, introduced in 2017, disproportionately impacts taxpayers in high-tax states like California and Illinois, sparking a broader debate about regional fairness in federal tax policy.