U.S. Senate Majority Chief John Thune (R-SD) speaks at a press convention following the U.S. Senate Republicans’ weekly coverage luncheon on Capitol Hill in Washington, D.C., U.S., June 10, 2025.
Kent Nishimura | Reuters
As Senate Republicans launch key details of President Donald Trump‘s spending package deal, some provisions, together with the federal deduction for state and local taxes, often called SALT, stay in limbo.
Enacted by way of the Tax Cuts and Jobs Act, or TCJA, of 2017, there’s presently a $10,000 limit on the SALT deduction via 2025. Earlier than 2018, the tax break — together with state and native earnings and property taxes — was limitless for filers who itemized deductions. However the so-called alternative minimum tax lowered the profit for some larger earners.
The Senate Finance Committee’s proposed text launched on Monday features a $10,000 SALT deduction cap, which is anticipated to vary throughout Senate-Home negotiations on the spending package deal. That restrict is down from the $40,000 cap authorised by Home Republicans in Could.
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The SALT deduction has been ‘contentious’
“SALT has been contentious for eight years,” mentioned Andrew Lautz, affiliate director for the Bipartisan Coverage Middle’s financial coverage program.
Since 2017, the SALT deduction cap has been a key situation for sure lawmakers in high-tax states like New York, New Jersey and California. These Home members have leverage throughout negotiations amid a slim Home Republican majority.
Beneath present legislation, filers who itemize tax breaks cannot declare greater than $10,000 for the SALT deduction, together with married couples filing jointly, which is taken into account a “marriage penalty.”
Nonetheless, elevating the SALT deduction cap has been controversial. If enacted, advantages would primarily flow to higher-income households, in response to a Could evaluation from the Committee for a Accountable Federal Finances.
At the moment, the overwhelming majority of filers — roughly 90%, in response to the most recent IRS knowledge — use the usual deduction and do not profit from itemized tax breaks.
Plus, the 2017 SALT cap was enacted to assist pay for different TCJA tax breaks, and a few lawmakers assist the decrease restrict for funding functions.
Within the Senate, “there is not a excessive degree of curiosity in doing something on SALT,” Senate Majority Chief John Thune mentioned June 15 on “Fox News Sunday.”
“I feel on the finish of the day, we’ll discover a touchdown spot, hopefully that may get the votes that we want within the Home, a compromise place on the SALT situation,” he mentioned.
However some Home Republicans have already pushed back on the proposed $10,000 SALT deduction cap included within the Senate draft.
Rep. Mike Lawler, R-N.Y., on Monday described the Senate proposed $10,000 SALT deduction restrict as “DEAD ON ARRIVAL” in an X post.
In the meantime, Rep. Nicole Malliotakis, R-N.Y., on Monday additionally posted in regards to the $10,000 cap on X. She mentioned the decrease restrict was “not solely insulting however a slap within the face to the Republican districts that delivered our majority and trifecta.”
