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3mo ago

Senate Faces GOP Divisions Over $40,000 SALT Deduction Cap Proposal

The House narrowly passed a budget bill raising the SALT cap, but Senate Republicans are signaling potential revisions to the measure.

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 U.S. House of Representatives approved a bill increasing the state and local tax (SALT) deduction cap from $10,000 to $40,000, including inflation adjustments and income phaseouts for households earning over $500,000.
  • The measure, championed by blue-state Republicans like Rep. Mike Lawler, aims to address 'double taxation' concerns in high-tax states such as New York, New Jersey, and California.
  • The proposed SALT cap increase could result in a $334 billion revenue loss over the next decade, according to the Penn Wharton Budget Model.
  • Senate Republicans, many representing lower-tax states, are considering amendments to reduce the cap, reflecting internal party tensions over fiscal policy.
  • The bill's fate remains uncertain as it moves through the Senate, with GOP divisions threatening further delays in the reconciliation process.