A group of blue-state Republicans is likely to obtain a significant increase in the SALT cap as they were able to negotiate with leadership during reconciliation, despite continued grumbling by the House Freedom Caucus.
One of the dominant points of contention as the House worked to pass its version of the One Big Beautiful Bill Act in May was how high to raise the cap on state and local tax deductions. After even more negotiations with the Senate GOP, the current $40,000 cap that was brokered appears likely to stay, as any changes would undoubtedly cost votes from the SALT Republicans.
That’s despite the Freedom Caucus putting out a fresh memo on Wednesday, tearing into several provisions in the Senate-passed legislation. While roughly the same, the Senate changed several parts of the House legislation, which has caused lawmakers to complain to leadership and threaten to withhold their votes.
Senate Republicans wanted to negotiate down that cap in the One Big Beautiful Bill Act. However, the SALT caucus remained firm in keeping the $40,000 cap in the bill and had threatened to vote against the entire bill if the SALT cap was dialed back in the Senate.
Still, Senate Republicans were able to whittle away at the House deal a bit. The current Senate-backed SALT deal would not be permanent and only last five years before snapping back to $10,000, the current limit.
The Freedom Caucus memo argues that the bill “includes more expensive SALT provisions (for just 5 years to reduce the ‘cost’ as a gimmick) to bail out blue states in high tax jurisdictions electing socialists to run their cities.”
Unlike the House, the Senate does not have a SALT caucus. Most in the Senate GOP conference would not want to see the cap raised at all or lowered. They argue that SALT deductions primarily benefit high-income earners in blue states and subsidize spending by state and local governments led by Democrats.
So, the $40,000 cap surviving the Senate is a big win in and of itself. If it survives this final hurdle in the House, which it appears likely to do, it would be an even bigger win for SALT caucus members and a demonstrable win they can tout to their constituents.
“In a negotiation, you’ve got to know how to define a win and take yes for an answer,” Rep. Mike Lawler (R-NY), one of the key SALT Republicans, recently told Politico. He called the deal a “big win.”
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