House Speaker Mike Johnson has reached a tentative agreement with Republican lawmakers from high-tax states to raise the State and Local Tax (SALT) deduction cap from $10,000 to $40,000. The deal is part of efforts to rally support for President Donald Trump’s sweeping tax and spending proposal known as the “One Big Beautiful Bill.”
Under the agreement, the increased SALT cap would apply to households earning under $500,000, with a gradual phase-out between $500,000 and $800,000. The cap would also be adjusted upward annually by 1% and remain in place for the next decade.
The compromise aims to address long-standing concerns among Republicans from states like New York and New Jersey, where residents face higher property taxes and living costs. Lawmakers from these regions have pushed for relief, arguing the original cap placed an unfair burden on middle-income families.
While the deal has satisfied some moderates, it has drawn criticism from fiscal conservatives who argue the move could undercut the bill’s financial discipline. Members of the House Freedom Caucus warned the broader package could add trillions to the national debt and disproportionately benefit higher-income taxpayers.
Despite the internal pushback, Johnson remains confident the legislation will pass. The bill includes other key provisions such as extending Trump-era tax cuts, eliminating taxes on tips and overtime, and boosting funding for defense and border security. A House vote is expected before the Memorial Day recess.