House Republicans Approve Trump’s Tax Bill with SALT Changes
House Speaker Mike Johnson (R-LA) was seen talking with Rep. Andy Ogles (R-TN) after a procedural vote on the extensive tax bill in Washington, D.C., on July 2, 2025.
Recently, House Republicans passed what President Trump refers to as his “one big beautiful” bill, which notably includes changes to the federal deduction limits for state and local taxes, commonly known as SALT.
The Salt deduction allows taxpayers to claim itemized deductions for state and local income, as well as property taxes. Trump’s 2017 tax reform imposed a $10,000 limit on these deductions, set to remain until 2025. This was a crucial point for several lawmakers from high-tax blue states. Prior to 2018, there were no limits on SALT deductions, although wealthy households were often subject to additional restrictions under the alternative minimum tax.
The latest Republican proposal aims to temporarily raise the SALT deduction cap to $40,000 starting in 2025. However, this increase will begin to phase out for individuals earning over $500,000, with both thresholds expected to rise by 1% each year until 2029, ultimately reverting back to the $10,000 limit in 2030.
Understanding SALT Deductions
Taxpayers can opt for either the standard deduction or itemized deductions, which include medical expenses that go over 7.5% of adjusted gross income, alongside the SALT limit of $10,000. The Tax Cuts and Jobs Act, effective from 2018, effectively doubled the standard deduction, with adjustments for inflation each year. For example, in 2025, the standard deduction is set at $15,000 for single filers and $30,000 for married couples filing jointly. Under Trump’s new rule, these amounts will slightly rise to $15,750 and $31,500, respectively.
According to the latest IRS data, about 90% of filers use the standard deduction, meaning they won’t really benefit from itemizing their deductions. In 2022, taxpayers in high-tax states like Connecticut, New York, New Jersey, California, and Massachusetts averaged close to a $10,000 SALT deduction. This suggests that a lot of taxpayers who utilize this deduction have hit the cap.
Meanwhile, states with high claims for SALT deductions include Washington, D.C., Maryland, California, Utah, and Virginia.
Economic Implications for High-Income Taxpayers
The proposed increase in the SALT deduction cap mainly benefits higher-income earners, per a May analysis from the Tax Foundation. The bill also includes provisions that allow owners of pass-through businesses to navigate the $10,000 limit, unlike earlier House versions that aimed to eliminate such strategies.
Chye-Ching Huang, executive director of the Tax Law Center at NYU, criticized the SALT provisions approved by the Senate, stating they overlook loopholes that enable wealthy taxpayers to bypass the limits, while simultaneously tightening regulations for other high earners.
