Moderate House Republicans from high-tax blue states and the Trump administration are zeroing in on an agreement for the state and local tax (SALT) deduction cap, which has been one of the key hang-ups dogging the party’s tax and spending megabill.
Multiple sources familiar with the SALT talks told The Hill that the House members and Trump administration officials are closing in on a plan for SALT, but it must be sold to Senate Republicans before being finalized.
Sen. Markwayne Mullin (R-Okla.), who has been the lead Senate GOP negotiator on SALT, told The Hill, “There’s a tentative deal between the SALT and White House, but not the Senate, [which is] still talking through that.”
One source familiar with the SALT talks, however, cautioned against saying there is a “deal” on the table, because Senate Republicans — who have been opposed to increasing the deduction cap — still have to sign off on the terms.
“Having learned my lesson with the House language, the Senate needs to have buy-in here, so I’m waiting to see what their fingerprints look like,” the source said.
Treasury Department Secretary Scott Bessent, who has met with SALT Caucus members in recent days, is scheduled to join Senate Republicans at their lunch Friday, two sources confirmed to The Hill, a gathering that could include discussion regarding SALT.
Rep. Nick LaLota (R-N.Y.), who did not attend SALT talks at the Treasury Department on Thursday afternoon, said he “heard of a deal” that includes a $40,000 deduction cap — the same number in the House bill — for five years, which would snap back to $10,000 for the next five years “and then in perpetuity.” LaLota, one of the most vocal SALT Caucus members, said he is opposed to that proposal.
“I’m a hard no on that,” he told reporters, saying the proposal “just affirms the very thing I’ve been against for so long.”
It remains unclear if the plan LaLota outlined is the same proposal the SALT Caucus members and administration are closing in on.
Speaker Mike Johnson (R-La.), for his part, sounded bullish Friday about a SALT breakthrough.
“A lot of progress yesterday,” he told reporters. “I think we’ll get that resolved in a manner that everybody can live with. No one will be delighted about it, but that’s kind of the way this works around here.”
The news of an impending agreement is a significant development in the long-stalled negotiations over SALT, one of the thorniest issues Republicans have faced.
The House bill included a $40,000 deduction cap — quadruple the $10,000 in current law — for individuals making $500,000 or less. Senate Republicans, however, enraged House SALT Caucus members by chopping that down, proposing a $10,000 deduction cap.
Since then, the two camps have been engaged in fierce negotiations.
In recent days, those talks have largely centered on keeping the $40,000 deduction cap from the House bill intact but dropping the $500,000 income threshold and indexing for inflation.
The administration, on behalf of Senate Republicans, offered the SALT Caucus a plan Thursday that had a total value of $200 billion, far less than the $344 billion value in the House bill, according to LaLota.
Several lawmakers in the group, however, rejected that proposal.