Speaker Mike Johnson (R-LA) and Treasury Department official Scott Bescent indicated that discussions regarding the state and local tax (SALT) deduction cap are nearing a conclusion.
During a lunch meeting on Friday with GOP Senators, Johnson and Bescent outlined a plan they had designed alongside a few moderate House Republicans from high-tax blue states. Senator Kevin Kramer (R-ND), who was present, mentioned that the proposal could raise the SALT deduction cap to $40,000 for the first five years, followed by $10,000 for the subsequent five years.
After the meeting, both Johnson and Bescent expressed optimism about the negotiations reaching their end.
“I think they’ll agree to it,” Johnson remarked when asked if Senate Republicans would back the SALT plan. “They’re going to analyze the final numbers, but I really believe we’re close to finalizing this.”
Bescent echoed this sentiment, stating that the negotiations were “very, very close,” noting that reactions from Senate GOP members were mixed.
The SALT deduction cap poses a significant challenge to the GOP’s ambitious legislative efforts, which leaders aim to present to President Trump by the self-imposed deadline of July 4.
The House’s proposal suggests a $40,000 deduction cap—four times the current limit of $10,000 for individuals earning under $500,000. In contrast, the Senate’s suggestion is a $10,000 cap, which has created tension among House Republicans.
Numerous Senate Republicans are inclined to limit the House’s proposed deduction caps and thresholds to maximize fiscal savings, especially since none of them are from high-tax blue states.
On Friday morning, reports emerged about a potential SALT breakthrough, revealing that members of the SALT Caucus and important stakeholders were zeroing in on the agreement.
However, not all members of the SALT Caucus are on board. Representative Nick LaLota, a vocal member of the group, told reporters that he had heard about the proposed $40,000 cap for five years followed by the $10,000 cap.
“I’m quite firm on this,” he commented regarding the proposal. “It just reinforces my long-standing opposition.”
