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2d ago

House GOP Reaches Tentative SALT Deduction Cap Deal

Speaker Mike Johnson and blue-state Republicans agree on a $40,000 cap for incomes up to $500,000, pending fiscal conservative approval.

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
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Overview

  • The tentative agreement raises the state and local tax (SALT) deduction cap to $40,000 for individuals earning up to $500,000 annually.
  • The deal includes a 1% annual income phaseout over 10 years, ensuring compliance with the $350 billion reconciliation budget limit.
  • Blue-state Republicans in the SALT Caucus, who rejected earlier proposals, have signaled progress but await final cost scoring from the Joint Committee on Taxation.
  • Speaker Mike Johnson must now secure support from hardline conservatives in the House Freedom Caucus, who have resisted significant increases to the cap.
  • President Trump urged SALT Caucus members to compromise, though some initially resisted his stance on maintaining a lower deduction cap.