House Republicans are set to dive into discussions over the state and local tax (SALT) deduction cap on Wednesday, officially kicking off negotiations for one of the largest — and most contentious — sticking points in the party’s package full of President Trump’s legislative priorities.
Republicans who hail from high-tax blue states like New York, New Jersey and California — a group that makes up the SALT Caucus — are scheduled to huddle with Speaker Mike Johnson (R-La.) and Ways and Means Committee Chairman Jason Smith (R-Mo.) on Wednesday at 4:30 p.m., sources told The Hill, marking the first meeting about the issue since the budget reconciliation process entered its final stage in the House.
The gathering comes as SALT caucus Republicans are warning that they will not support a Trump agenda bill unless it includes a suitable increase in the deduction cap — a warning for Johnson and his lieutenants, who will need near unanimity in the chamber to get the legislation over the finish line.
“As I’ve said repeatedly, this is a top priority for me. So it is imperative that there be a SALT fix in the bill, period,” said Rep. Mike Lawler (R-N.Y.), a vocal advocate of a SALT deduction increase. “Either it’s going to be fixed or it’s not. And if it’s not, I ain’t voting for the bill.”
“Yeah, I’m all in on the SALT provision,” Rep. Nick LaLota (R-N.Y.) told reporters when asked if increasing the deduction cap is a red line for him. “My folks didn’t just send me here for my great, good looks, they sent me here to fight for SALT, and I intend to win that fight.”
LaLota said he expects leadership to present the SALT caucus members with a number for the deduction cap during Wednesday’s meeting. He would not say what his ideal number is.
“I think that we all want to hear each other’s logics about why it is that our numbers are what they are,” LaLota said of the gathering.
Smith, for his part, said the gathering is “the Speaker’s meeting,” adding “I’m there to listen.” When asked about a number for the deduction cap, he said “I’ve given the SALT caucus all of the various information so that they know how different numbers affect their districts.”
On the other end of the ideological spectrum, however, are deficit hawks who are not keen on offering such relief for Democratic-led states. Rep. Chip Roy (R-Texas), a member of the conservative House Freedom Caucus, voiced his opposition to such a move on Tuesday, arguing that expanding the deduction cap would make it more difficult for the package to be deficit-neutral, which hardliners are demanding.
“Maybe it’s just because I don’t want to subsidize high-tax, blue-state jurisdictions,” he said when asked why he is opposed to increasing the cap. “Maybe it’s because I can do math… If you lift the cap to $100,000 that’ll be how much? Over a trillion dollars. So the same folks are gonna say well, we gotta make sure we extend the tax cuts and make them permanent, but we can’t touch Medicaid, but we need to lift our SALT cap. And I’m like okay, come in there and show me the arithmetic on the board.”
The opposing dynamics are sure to create a headache for Johnson and Smith as they look to appease both sides of the prickly issue to jam the final package through the chamber. The Speaker, for his part, says he plans to approach the matter the same way he does other controversial debates: By talking through the topic with the conference.
“We’re gonna continue doing what we’ve been doing and that’s building consensus around a solution and that’s gonna be an important conversation tomorrow,” he said.
Time is of the essence. Johnson told reporters on Tuesday he wants the remaining markups to take place next week, that way the House Budget Committee can merge the portions together the week after, teeing up a final vote in the House the last week of May.
The Ways and Means Committee, however, has not yet announced a date for its markup.
“Who said we’re having a markup next week? I haven’t,” Smith told reporters.
Lalota said “the trajectory the next couple of weeks will be highly determined by the number they present to us.”
Republicans placed a $10,000 deduction cap on SALT as part of the 2017 Trump tax cuts, which has become one of the most controversial provisions in the big-ticket bill. Since then, Republicans and Democrats in high-tax blue states have been pushing to increase the ceiling, introducing different proposals.
Lawler, for example, introduced a bill in January that would increase the SALT deduction cap to $100,000 for single filers and $200,000 for married couples who file jointly. Lalota, meanwhile, has a bill that would hike the cap to $15,000 for single filers and $30,000 for married individuals filing together.
If the SALT cap is not extended, taxpayers would have the ability to deduct all eligible state and local income, revenue from sales, property taxes and foreign income taxes. According to a February 2024 brief from Penn Wharton, such an outcome would cost an additional $1.2 trillion.
One fact on the side of the SALT caucus is that Trump has expressed support for their effort. Shortly before holding a rally on Long Island in September, the then-candidate wrote on Truth Social “I will turn it around, get SALT back, lower your Taxes, and so much more.”
Heading into the meeting, with a clear line drawn in the sand, LaLota said he will know if leadership’s offer is right when he sees it: And joked that he would notify Capitol Hill in a salty fashion.
“If the number is sufficient I will be able to say in that moment that it is,” LaLota told reporters. “Gonna spread salt all around the Capitol. We’ll get salty margaritas and whatever else.”