Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
The US Senate’s version of Donald Trump’s flagship tax bill will not propose raising the cap on state and local tax deductions, in a move that threatens to torpedo the so-called “big, beautiful bill”.
The Senate finance committee is set to publish a draft bill on Monday afternoon that will keep the annual cap on the amount of state and local taxes taxpayers can deduct from their federal tax bills, commonly known as “Salt” at the current level of $10,000, said two people briefed on the proposals.
That stands in stark contrast to a House version of the bill that narrowly passed the lower chamber of Congress last month and raised the Salt cap to $40,000 a year. The House proposal would amount to a significant tax break for homeowners in states including New York, New Jersey and California, which have some of the highest property tax rates in the US.
While people briefed on the plans insist the figure in the Senate bill should be seen as a “place holder” while negotiations continue between key members of Congress and the White House, the move has prompted outrage from a group of House Republicans who see Salt as a make-or-break issue.
“I have been clear since day one: sufficiently lifting the Salt cap to deliver tax fairness to New Yorkers has been my top priority in Congress,” said Mike Lawler, a Republican congressman whose district includes many of the affluent suburbs north of New York City.
“After engaging in good-faith negotiations, we were able to increase the cap on Salt from $10,000 to $40,000,” Lawler added. “That is the deal, and I will not accept a penny less. If the Senate reduces the Salt number, I will vote no, and the bill will fail in the House.”
Any revisions to the “big, beautiful bill” will need to pass the Senate and be rubber-stamped by the House before Trump can sign the legislation into law.
Speaker of the House Mike Johnson cannot afford to lose more than a handful of votes when the bill returns to the lower chamber because Trump’s party controls the House by a razor-thin margin.
Elise Stefanik, a Republican congresswoman whose district spans part of upstate New York and is among Trump’s fiercest defenders on Capitol Hill, said the cap would “have to go up”.
“Everyone knows this 10K number will have to go up. And it will,” Stefanik said in a post to X. “NY Republicans will fight and deliver real tax relief for our overly taxed constituents.”
The Salt cap has been divisive since it was first introduced as part of Trump’s sweeping 2017 tax bill. Many of Trump’s critics saw the move as unnecessarily punitive to residents of high-tax states where voters favour the Democratic party.
Lawmakers from both parties are sceptical of the deductions, saying they amount to an unnecessary giveaway to the highest earners.
