Speaker Johnson Reaches Deal to Raise SALT Deduction Cap

In a strategic move to solidify Republican unity and ensure passage of President Trump’s sweeping economic agenda, House Speaker Mike Johnson has reached a tentative agreement to raise the cap on state and local tax (SALT) deductions a concession aimed at securing the support of blue-state GOP lawmakers.

The deal would increase the SALT cap from $30,000 to $40,000 per household for those earning under $500,000 annually, and is expected to be included in Trump’s much-anticipated “big, beautiful bill.” The massive legislative package is designed to permanently extend Trump-era tax cuts, eliminate taxes on tips and overtime, and fund other cornerstone conservative priorities.

While the agreement marks progress in bridging internal GOP divides, it also risks backlash from conservative Republicans in low-tax states who have long opposed SALT expansion. They argue rightfully that SALT deductions reward high-tax states for punishing their own citizens and shift the financial burden to federal taxpayers in fiscally responsible regions.

Here’s what you need to know:

• The current SALT deduction cap, implemented in the 2017 Tax Cuts and Jobs Act, is set at $10,000 and disproportionately affects taxpayers in Democrat-controlled states with high income and property taxes.

• The new proposal would quadruple that cap to $40,000, giving a significant tax break to households in states like New York, California, and New Jersey all of which have driven out middle-class families with out-of-control taxation.

• Only households making less than $500,000 per year would be eligible, maintaining some guardrails to limit relief to the middle class rather than ultra-wealthy elites.

Blue-state Republicans have framed the issue as make-or-break, warning that failure to raise the cap could jeopardize the GOP’s ability to hold suburban districts in the 2026 midterms. But conservatives from red states are pushing back, demanding structural reforms to blue-state tax policy instead of federal bailouts disguised as deductions.

The issue has ignited a larger battle within the GOP over the direction of Trump’s megabill. Alongside SALT negotiations, Republicans are also sparring over green energy subsidies, Medicaid reforms, and enforcement of spending caps. Yet the House leadership appears confident the bill which includes no tax on tips, no tax on overtime, and relief for auto loan interest will ultimately unify the party heading into 2025.

Critics of the SALT hike warn that it sends the wrong message: that fiscal recklessness will be subsidized by the rest of the country. Instead of encouraging Democrat governors to rein in bloated budgets and sky-high property taxes, raising the cap could entrench the very policies that have driven millions of Americans to flee places like California and New York for Florida, Texas, and Tennessee.

Still, the reality of legislative politics means some compromise is inevitable. The key is whether this SALT concession buys enough votes to pass the broader bill and whether the final package still reflects the America First values that put workers, families, and small businesses ahead of lobbyists and bureaucrats.

Stay tuned as negotiations continue and share this article or subscribe to our newsletter for updates to keep others informed about the battle over your taxes and your future.