While Republicans hash out the details on the path to passing President Trump's 1,116-page 'Big, Beautiful Bill' - a key sticking point has emerged in regards to the state and local tax (SALT) deduction, which allows taxpayers who itemize to deduct state and local taxes (such as income and property taxes) from their federal taxable income. This primarily benefits rich taxpayers in high-tax states such as California, New York and New Jersey.
Tax writers on the House Ways and Means Committee have offered to raise the cap from its current $10,000 to $30,000 for joint filers making up to $400,000 per year - while Speaker Mike Johnson's most recent offer was a $40,000 cap for indivuduals / $80,000 for couples for four years at a $751,600 income limit.
The 'SALT Caucus,' meanwhile, are holding out for at least a $62,000 cap for individual filers, and $120,000 for couples before they'll vote 'yes' on the bill.
"I’m still a no on the Jason Smith number," said SALT Caucus member Rep. Nick LaLota (R-NY), referring to the $30,000 cap floated by House Ways and Means Chair Jason Smith (R-MO). "I hope that the president’s presence here today motivates everybody, especially my leadership, to give the SALT Caucus a number to which we could actually say yes."
The SALT cap is worth thousands of dollars in savings to millions of typically higher-income taxpayers who itemize vs. take the standard deduction. The cost to the rest of America for this would be around $1 trillion over the next decade, according to the Joint Committee on Taxation.
Before 2017, the average SALT deduction was approximately $13,000, before it was capped at $10,000. In 2022, nearly 10% of all taxpayers used a SALT deduction.
Trump Drops F-Bomb
During a Tuesday meeting with House Republicans, President Donald Trump pressured Republicans to fall in line behind the bill and get it done - asking moderate Republicans from blue states to give up their SALT battle, while warning members not to "fuck with Medicaid," which some lawmakers have eyed for cuts.
"It’s not a question of holdouts. We have a tremendously unified party," Trump told reporters before the meeting. "There are some people who want a couple of things that maybe I don’t like or that they’re not going to get."
A White House official said Trump made clear in the meeting that he’s losing patience with all holdout factions of the conference, including the SALT Caucus and the House Freedom Caucus, and he insisted every Republican should vote “yes.”
His main requests to the conference were not to let SALT impede the bill, arguing Republicans can fight for SALT later on; not to touch Medicaid except for eliminating waste, fraud and abuse such as booting off those who entered the country illegally and instituting commonsense work requirements; and to stick together and get the bill done, a White House official told The Hill.
The president told lawmakers in the closed-door meeting to “let SALT go,” arguing concerns over the provision can’t get in the way of passing the bill. He signaled he was supportive of raising the SALT deduction from $10,000 to $30,000 for anyone making $400,000 or less — the proposal currently in the bill that members of the SALT Caucus have vocally rejected. -The Hill
Trump's appearance at the nearly two-hour meeting didn't move the needle much, however.
"The president I don’t think convinced enough people that the bill is adequate the way it is," said Rep. Andy Harris (R-MD), chair of the House Freedom Caucus, whose members are among the loudest critics of the massive spending package. "I can’t support it the way it is right now," Harris added.
Meanwhile, Rep. Mike Lawler (R-NY), a prominent SALT Caucus member, said "While I respect the president, I’m not budging on it."
So, it all comes down to SALT.
