As the $30,000 SALT cap proposal divides GOP lawmakers, blue-state Republicans demand higher limits while fiscal conservatives urge restraint in a legislative showdown that could determine the fate of Trump's broader tax agenda
House Republicans have unveiled a sweeping tax plan that includes tripling the cap on state and local tax (SALT) deductions from $10,000 to $30,000, but the proposal has sparked an intense internal battle that threatens to derail the broader legislative effort. The contentious SALT provision has become a pivotal element in President Trump's tax and spending package, with lawmakers from high-tax states demanding even higher caps while fiscal conservatives worry about ballooning costs.
Key Developments in the Tax Bill Battle
The House Ways and Means Committee, led by Chairman Jason Smith (R-MO), released the full text of its portion of the tax bill on Monday. The plan proposes increasing the SALT deduction cap to $30,000 for those with a modified adjusted gross income of $400,000 or less, along with extending Trump's 2017 tax cuts, eliminating federal taxes on tips and overtime through 2028, creating a tax break for auto loan interest payments, and establishing new savings accounts for newborns called "MAGA accounts" CNBC1.
However, this $30,000 cap proposal has been met with fierce resistance from a group of Republican lawmakers from high-tax states like New York, New Jersey, and California. These members, often referred to as the "SALT Caucus," have threatened to vote against any bill that doesn't include a substantially higher cap.
"There's a green 'yes' button and there's a red 'no' button to press. Come time, if there's not enough SALT in this bill, I'm pressing the red 'no' button," declared Representative Nick LaLota, Republican of New York The New York Times2.
With Republicans holding only a slim majority in the House, the defection of just a handful of members could sink the entire package, putting pressure on House Speaker Mike Johnson to find a compromise before the scheduled floor vote next week.
Competing Visions Within the GOP
The SALT cap debate has exposed deep divisions within the Republican party over fiscal policy and regional interests. The tax-writing Ways and Means Committee is moving forward with the $30,000 SALT cap, while members of the SALT Caucus are pushing for much higher limits.
Some SALT Caucus members have floated dramatically higher figures, such as $62,000 for individual filers and $124,000 for joint filers, according to a Republican close to the process NBC News3.
Representative Jeff Van Drew (R-NJ) has indicated that a cap around $30,000 or $40,000 would be acceptable, while Representative Young Kim (R-CA) has proposed a $62,000 deduction per individual. Meanwhile, Representative Nicole Malliotakis (R-NY), who serves on both the SALT Caucus and the Ways and Means Committee, has suggested that Americans under a certain income limit should be able to take the full deduction The New York Times2.
On the other side, fiscal conservatives are resisting higher caps due to budgetary concerns. "My bottom line is, we need to have a fiscally responsible package. It is pathetic that we have to bail out high-tax states," said Representative Greg Murphy (R-NC) The New York Times2.
Economic Impact and Fiscal Considerations
The debate over the SALT cap isn't just political—it has significant economic implications. Even a relatively modest change, like doubling the cap for married couples, would cost approximately $230 billion over a decade, according to the Committee for a Responsible Federal Budget. More generous alterations along the lines of what New York Republicans have demanded could exceed $1 trillion The New York Times2.
Currently, if taxpayers itemize deductions, they cannot deduct more than $10,000 in levies paid to state and local governments, including income and property taxes. This cap, established in the 2017 Tax Cuts and Jobs Act, is set to expire after 2025 without congressional action.
According to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, "If you raise the cap, the people who benefit the most are going to be upper-middle income." An earlier analysis by the Tax Policy Center found that a proposal to increase the cap from $10,000 to $20,000 for married couples filing jointly would offer almost all the tax break to households making more than $200,000 per year CNBC1.
Leonard Burman from the Tax Policy Center noted that the $10,000 cap was one of the more progressive elements of the 2017 tax law, aimed at limiting benefits for higher-income taxpayers The New York Times2.
Trump's Role in the SALT Debate
President Trump's position on the SALT cap has evolved over time. Despite enacting the $10,000 SALT cap in 2017, he reversed his position during the 2024 campaign, vowing to "get SALT back" if elected again. Since taking office for his second term, he has renewed calls for reform CNBC1.
More recently, Trump has signaled a tentative acceptance of raising the cap, despite previously advising against it. This mixed messaging has created additional complexity in the negotiations, as lawmakers try to align their positions with the president's priorities while balancing regional interests and fiscal concerns.
Next Steps in the Legislative Process
House Ways and Means Committee Chair Jason Smith is moving forward with a markup of the tax bill beginning Tuesday afternoon. This creates additional pressure on Speaker Mike Johnson to negotiate a compromise on the SALT issue before the planned floor vote next week NBC News3.
If Republicans cannot reach a deal and their legislative agenda collapses, much of the 2017 tax law would expire, including the $10,000 cap, allowing Americans once again to deduct all of their state and local taxes—though other tax mechanisms, like an alternative minimum tax, might offset these savings The New York Times2.
Regional Impact and Constituent Concerns
The SALT deduction cap disproportionately affects residents of high-tax states. A Bipartisan Policy Center analysis conducted before the 2022 redistricting found that forty of the top 50 U.S. congressional districts impacted by the SALT limit are in California, Illinois, New Jersey, or New York CNBC1.
This regional impact explains why the issue has become so important to representatives from these states, many of whom represent districts where constituents face high state income taxes and property taxes.
As the legislative debate continues, Americans in high-tax states are watching closely, knowing that the outcome will significantly impact their tax bills. For lawmakers from these regions, the political stakes are equally high, as their constituents will evaluate them based on their ability to deliver relief from what many view as an unfair penalty on states that fund robust public services.
Looking Ahead: Can Republicans Find Common Ground?
As Tuesday's committee markup approaches, the question remains whether Republicans can resolve their differences on the SALT cap and advance a unified tax package. The debate highlights the broader challenge of balancing regional interests, fiscal responsibility, and political promises in tax policy.
With several competing proposals on the table and strong feelings on both sides, will House Republican leadership find a compromise that satisfies both the SALT Caucus and fiscal conservatives, or will this internal division jeopardize the party's broader tax agenda ahead of next week's crucial vote?
