House and Senate Republicans are not close to a deal on raising the state and local tax deductions, leaving the fate of the “one big, beautiful” reconciliation bill up in the air as the lower chamber’s razor-thin margins give SALT Republicans the upper hand.
The Washington Examiner confirmed that GOP SALT Caucus co-chairs Young Kim (R-CA) and Andrew Garbarino (R-NY), with Rep. Mike Lawler (R-NY), held a call with Sen. Markwayne Mullin (R-OK) on Wednesday afternoon to discuss the cap, as the Senate’s version of the One Big Beautiful Bill Act reverts the SALT cap to $10,000.
The House-passed version of the legislation quadruples the cap to $40,000 and only limits deductions for households making more than $500,000 per year.
Mullin, a key mediator between House SALT Republicans and Senate Republicans, floated keeping the $40,000 cap but lowering the income limit, according to a source familiar. However, no deal was made, and the SALT Republicans told Mullin they wanted the original deal they negotiated in “good faith” with House Speaker Mike Johnson (R-LA).
If no deal is reached and the end-of-year tax deadline passes, the SALT cap will be eliminated and expire along with the other 2017 Tax Cuts and Jobs Act provisions that apply to households.
Kim told the Washington Examiner ahead of the call with Mullin that she is worried the Republican conference may be heading down the same path it did in 2017 when Congress passed the Tax Cuts and Jobs Act with a low SALT cap.
“When we got this portion of the tax bill wrong in 2017 … and as I reminded our House leadership during the House negotiation times, that we lost a few of our Republican colleagues, especially where I am in Orange County, because we didn’t do this right,” Kim told the Washington Examiner ahead of the call with Mullin. “We reminded the speaker and the leadership that that is the fate that we may be committing if the SALT Caucus does not get a win on this one and we do not get this right.”
Kim added that part of the deal made between the SALT Caucus and Johnson included the speaker supporting it in the Senate. Johnson told Senate Republicans he hoped they would make minimal changes to the reconciliation legislation so it could get to President Donald Trump’s desk by July 4.
However, the Senate is not as keen on SALT as the House is, and a drop in the cap is expected once it hits the upper chamber. However, reverting to the current $10,000 level has angered many in the SALT Caucus, including Lawler and Rep. Nick LaLota (R-NY).
Both have said they are “done negotiating” and that if the reconciliation bill comes back to the House without the negotiated $40,000 cap, it is “DEAD ON ARRIVAL.”
Some Republicans, including the hard-right House Freedom Caucus and its like-minded Senate counterparts, have argued against raising the SALT cap, accusing it of subsidizing blue states and wasting federal money.
However, New York and California Republicans have pushed back on this.
“What we’ve asked for was something that was reasonable and fair, that focused on middle-class families and is supported by the Republican principle of allowing taxpayers to keep more of their hard-earned money,” Rep. Nicole Malliotakis (R-NY) told the Washington Examiner.
“This idea of subsidizing blue, poorly-run blue states is a fallacy,” Malliotakis added. “It’s a fallacy. Why? Because New Yorkers pay more to the federal government in taxes than they receive. The people who are being subsidized are the ones who are receiving refundable tax credits, which are still in this bill. So, if we’re going to be doing that, then we should be doing the SALT relief.”
Lawler, who represents a swing district won by former Vice President Kamala Harris in the 2024 election, has said over the last few months that Republicans should remember that they wouldn’t even be in the majority without seats such as his.
Though the Freedom Caucus is typically the rabblerousers in the House, the SALT Caucus stepped up during the reconciliation process and has the ability to demand significant legislative changes.
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Because of the House’s razor-thin margins, the SALT and Freedom caucuses have the numbers to essentially tank the entire bill if they don’t get what they want.
Currently, Johnson can afford to lose three seats to pass the legislation along party lines, with that number fluctuating depending on Democrats’ attendance.