Johnson, SALT Republicans zero in on critical agreement

Speaker Mike Johnson (R-La.) and moderate Republicans have zeroed in on an agreement for the state and local tax (SALT) deduction cap, multiple sources told The Hill, solving a critical hang-up that has dogged the party’s “big, beautiful bill.”

The proposal would increase the SALT deduction cap to $40,000 — quadruple the current $10,000 mark — for individuals making $500,000 or less in income, the sources said. 

The deduction cap and income limits would increase 1 percent per year over 10 years, or perhaps less for the final year, with a target of not less than $344 billion in “value.” When the bill expires, the deduction and income limits stay at $44,000 and $552,000, 

The deal is contingent on President Trump endorsing the manager’s amendment to make the changes in the bill; the Speaker holding the line if the Senate balks; and the SALT Caucus going on “tour” to convince Senate Republicans to support the deal if the Speaker requests it.

That marks an increase from the $30,000 cap with a $400,000 income cap currently in the bill — figures SALT Caucus members vehemently rejected. The House Rules Committee is scheduled to convene at 1 a.m. EDT Wednesday, when the panel will consider changes to the bill.

While several members of the SALT Caucus are supportive of the plan, according to sources, Johnson will need to sell the proposal to hard-line conservatives — including many in the House Freedom Caucus — who have been resistant to a significant hike to the deduction cap.

Exiting a meeting in the Speaker’s office Tuesday night, members of the SALT Caucus said they did not yet have a firm deal but signaled significant progress.

“We weren’t even in the same universe a couple of days ago. We’re on the same ballfield now,” Rep. Nick LaLota (R-N.Y.) told reporters.

The agreement between Johnson and the SALT Caucus is a massive step forward in passing the party’s “big, beautiful bill.” The Speaker and moderate Republicans from high-tax blue states struggled for weeks to find consensus on the critical yet tedious issue, trading proposals behind closed doors.

Rep. Elise Stefanik (R-N.Y.) — who is considering a run for governor — stepped in to become a more active part of negotiations after unexpectedly withdrawing from her United Nations ambassador nomination. Sources said she had told Johnson that he had to move on the $30,000 figure, which she had said was “insulting” in a joint statement with LaLota and fellow SALT-focused New Yorker Republican Reps. Mike Lawler and Andrew Garbarino.

Stefanik, though, notably did not join a statement with five core SALT Republicans on Tuesday following Trump’s visit with House Republicans on Capitol Hill.

Trump had told lawmakers earlier Tuesday to “let SALT go,” signaling support for the $30,000 cap and telling reporters raising it would benefit “Democrat governors.” He took specific aim at Lawler, one of the most outspoken about making greater changes to the SALT deduction.

Lawler held the line in the immediate aftermath of Trump’s speech, saying he was “not budging.”

But later in the day, after SALT Caucus meetings in the Speaker’s office, Lawler said GOP leaders have floated “an improved offer” to members of the group, and the lawmakers were waiting for cost estimates to arrive from the Joint Committee on Taxation.