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18h ago

House Passes Bill Raising SALT Deduction Cap to $40,000

The legislation now heads to the Senate, where Republican divisions over deficit concerns and spending priorities may shape its final form.

Committee chair U.S. Rep. Virginia Foxx (R-NC) and U.S. Representative and Ranking Member Jim McGovern (D-MA) attend the House Rules Committee's hearing on U.S. President Donald Trump's plan for extensive tax cuts, on Capitol Hill, in Washington, D.C., U.S., May 21, 2025. REUTERS/Nathan Howard
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Overview

  • The House approved a bill increasing the state and local tax (SALT) deduction cap from $10,000 to $40,000, marking a significant shift from the 2017 Tax Cuts and Jobs Act.
  • Rep. Mike Lawler (R-N.Y.) championed the increase, citing the financial burden on homeowners in high-tax states like New York and California.
  • Critics, including Sen. Ted Cruz (R-Texas), argue the change disproportionately benefits wealthier taxpayers in blue states while increasing the federal deficit.
  • The Congressional Research Service estimates that raising the SALT cap could cost the federal government $120 billion in lost revenue next year.
  • The bill now moves to the Senate, where further modifications are expected amid ongoing disagreements over deficit offsets and spending cuts.