Trump indicates openness to scaling back SALT relief in GOP tax bill
President Donald Trump on Wednesday suggested to Senate Republicans that he is open to a lower limit on tax deductions for state and local taxes than what's included in the House-passed version of his sweeping legislation, according to three people familiar with the matter.
In a closed-door discussion with GOP senators, the president indicated that Senate Republicans could raise the cap from the current limit of $10,000 but not as high as the House bill, said the people, who spoke on the condition of anonymity to reflect private conversations.
The policy has been a flash point among the GOP caucus ever since Trump's 2017 tax law first capped the deductions on state and local taxes, or SALT. That limit helped the GOP hold the cost of that legislation in check, but moderate Republicans from high-tax states like New York, New Jersey and California have pushed to ease or remove it. The version of the new legislation that the House passed raises the cap to $40,000 for Americans earning less than $500,000 annually and is projected to increase the federal deficit by hundreds of billions of dollars.
Trump's comments on Wednesday are expected to give Senate Republicans a boost as they rework the House bill. Republican senators are nearly universally hostile to lifting the SALT cap, as none of them represent the high-tax states hit hardest by it.
A White House spokesman declined to comment.
'There really isn't a single Republican senator who cares much about the SALT issue … We don't think that low-tax states ought to be subsidizing high-tax states,' Senate Majority Leader John Thune (R-South Dakota) told reporters on Wednesday after meeting with Trump.
Sen. Ron Johnson (R-Wisconsin) also confirmed that SALT was discussed at the meeting, adding: 'I think the president realizes there's nobody here in Republicans in the Senate that support extending that. Again, that's just going to be a bone of contention. The problem we all have is such narrow margins.'
Johnson added of Trump: 'He would love to see the Senate improve the bill. He'd be supportive of that. But, he said, but you do this, you lose three votes here. You do that, you lose three votes here. That's the reality we're having to deal with.'
Tax policy experts have largely said the cap primarily affects higher-income households. Marc Goldwein, senior vice president at the nonpartisan Committee for a Responsible Federal Budget, said the GOP should lower the cap from $40,000 and extend it to businesses and corporations.
'The right amount of relief is no relief, because there's no particular reason there should be a SALT deduction in the first place,' Goldwein said.
But a bloc of House Republicans from blue states have threatened not to vote for the tax bill, the centerpiece of Trump's agenda, if the Senate changes the cap again. They represent enough members to sink the bill if they all oppose it; Democrats are expected to vote against it unanimously regardless.
'If the Senate changes the negotiated number of $40,000 — it will derail final passage of the bill,' Rep. Michael Lawler (R-New York), who helped lead the push to raise the cap in the House, wrote on X.
The Senate is expected to propose changes to other provisions and may consider making business tax cuts permanent and adjusting Medicaid and food stamps funding, which could further complicate negotiations.
'We're trying to work with our conference. Obviously, we want the House to be able to recognize the bill when they get it back, but it's also $353 billion to do that one section,' Sen. James Lankford (R-Oklahoma) said. 'That's a very significant cost feature.'
Jacob Bogage contributed to this report.
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