House GOP pushes for higher SALT deduction cap

[UNITED STATES] House Republicans are pushing to raise the cap on the federal deduction for state and local taxes—commonly known as SALT—as part of a broader tax and spending proposal backed by former President Donald Trump.

The House Ways and Means Committee, which oversees tax legislation, released the full text of its section of the bill on Monday afternoon. Under the proposed changes, the SALT deduction cap would increase to $30,000 for individuals earning a modified adjusted gross income of $400,000 or less.

The renewed focus on SALT comes amid ongoing debates over fiscal policy and economic equity. Opponents argue that increasing the cap would primarily benefit wealthier taxpayers in high-cost states. Supporters, however, say it offers much-needed relief to middle-class families burdened by escalating property taxes and living costs. The outcome could influence voter sentiment in key battleground states ahead of the 2026 midterm elections.

Still, the SALT cap remains a contentious point in tax negotiations, and the current proposal may undergo significant changes. The committee is scheduled to begin debate and hold a vote on the bill Tuesday afternoon.

Originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA), the $10,000 cap on SALT deductions is set to expire after 2025 unless Congress acts. The cap currently limits the amount itemizing taxpayers can deduct in state and local levies, including income and property taxes.

The SALT limit was initially intended to offset revenue losses tied to other TCJA provisions, such as corporate tax cuts. But with the cap’s expiration approaching, lawmakers are under increasing pressure to act—particularly as residents in high-tax areas face mounting financial strain. Some economists have cautioned that maintaining the cap could accelerate migration out of high-tax states, potentially weakening their local economies.

Raising the cap has long been a priority for lawmakers from high-tax states like California, New Jersey, and New York. With Republicans holding a narrow majority in the House, representatives from those regions may carry significant influence in the legislative process.

Although Trump implemented the $10,000 SALT cap as part of the TCJA, he reversed his stance during his most recent presidential campaign, pledging to “get SALT back” if re-elected. Since returning to office, he has reiterated his call for reform.

The political landscape around SALT is complex, with divisions emerging within the GOP itself. Fiscal conservatives warn that raising the deduction cap could hinder efforts to reduce the federal deficit. In contrast, moderate Republicans—especially those representing affluent suburban districts—view raising the cap as critical to maintaining voter support.

While some lawmakers have proposed a full repeal of the SALT cap, such a move appears unlikely given the current budget constraints and competing policy priorities.

“It all has to come together in the context of the broader package,” said Garrett Watson, director of policy analysis at the Tax Foundation, in a recent interview with CNBC. Still, he noted a higher cap could be achievable.

Who Could Be Affected by SALT Changes

Taxpayers can either take the standard deduction or itemize their deductions, which include SALT payments capped at $10,000, as well as other expenses like medical costs above 7.5% of adjusted gross income and charitable contributions.

Since the TCJA took effect in 2018, the standard deduction has nearly doubled and adjusts annually for inflation. For 2025, it is projected to be $15,000 for single filers and $30,000 for married couples filing jointly.

Because of the higher standard deduction, about 90% of taxpayers now opt against itemizing, according to the IRS. Nonetheless, the SALT cap remains a politically charged issue due to its disproportionate impact on residents of high-tax states, where even middle-income homeowners can exceed the deduction limit.

In such regions, local tax rates and high property values can push taxpayers above the cap, reducing their federal tax benefits compared to those in lower-tax states. This has intensified calls for a more tailored approach to SALT relief.

Typically, the value of itemized deductions—and the burden of state and local taxes—increases with income, said Watson of the Tax Foundation.

Who Stands to Gain From a Higher SALT Cap

According to tax experts, a higher SALT deduction limit would primarily benefit higher earners. For example, one earlier proposal aimed at addressing the so-called "marriage penalty" would raise the deduction cap for joint filers from $10,000 to $20,000.

A January analysis from the Tax Policy Center found that nearly all of the tax relief under that plan would go to households earning over $200,000 annually.

“If you raise the cap, the people who benefit the most are going to be upper-middle income,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, noting that definitions of "upper-middle income" vary widely based on location.

A pre-2022 redistricting analysis by the Bipartisan Policy Center found that 40 of the top 50 congressional districts most affected by the SALT cap were in California, Illinois, New Jersey, or New York.

In the event of a full repeal of the SALT cap, households making $430,000 or more would receive nearly three-quarters of the benefits, according to a separate analysis by the Tax Policy Center from September.