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The fight over a SALT tax cap deal that would help Californians hits a snag

Kaitlyn Schallhorn, The Orange County Register on

Published in Political News

After the House passed the massive tax breaks and spending cuts package in May, congressional Republicans from high-tax states claimed victory.

The reconciliation bill, after some late-in-the-game negotiating, included an increase to the cap on how much of a deduction taxpayers can claim to offset high state and local tax obligations.

Raising the cap on these deductions, often called SALT, was one of the trickier negotiations among House Republicans when they hammered out details of the more than 1,000-page bill. But in the final hours, a deal was struck, increasing the cap to $40,000 for people with incomes up to $500,000, adjusted 1% for inflation annually.

It was a 400% increase and a win for Republicans from California, New Jersey and New York, who had threatened to withhold their much-needed support of the whole bill without the cap lifting.

But the bill is now in the Senate, and Majority Leader John Thune is saying not so fast.

Thune, a South Dakota Republican who is relatively new in his majority leader tenure, has suggested the upper chamber will have to make some changes to the massive bill — including to the SALT cap.

“It would be very, very hard to get the Senate to vote for what the House did,” Thune recently told POLITICO, referring to the SALT cap deduction. “We’ve just got some people that feel really strongly on this.”

That’s raised alarms among the group of House Republicans who pushed for a SALT cap increase, including Rep. Young Kim, R-Anaheim Hills.

“When did taxing income that’s already been taxed become a Republican ideal? Our party has always stood for lower taxes and a fair, commonsense tax code,” said Kim and Rep. Andrew Garbarino, R-New York, in a joint statement Thursday.

“We worked in good faith with House leadership to secure a fair deal that provides our constituents with much-needed SALT relief,” the co-chairs of the SALT Caucus said.

“Hardworking families we represent are penalized by the SALT cap, and this deal keeps the president’s commitment to fix this issue and has the support of firefighters, police, small businesses and working Americans who keep our country moving.”

“The Senate would be remiss to forget that the path to 218 — and delivering for the American people — runs through the SALT Caucus.”

Part of the problem, on the surface, is that those high-tax states have no Republican representatives in the Senate, where the GOP is in control.

“There’s not a single (Republican) senator from New York or New Jersey or California, and so there’s not a strong mood in the Senate Republican caucus right now to do $353 billion for states that basically the other states subsidize,” Senate Finance Committee Chair Mike Crapo, R-Idaho, told Punchbowl News.

 

But there are also greater concerns about the cost.

The massive plan to slash spending and taxes would also add an estimated $2.4 trillion to the deficit over a decade and leave nearly 11 million more people without health insurance, an analysis from the nonpartisan Congressional Budget Office found.

Kim, who represents communities in Orange, Riverside and San Bernardino counties, said she is confident House Speaker Mike Johnson can convince his Senate counterparts that the SALT cap increase is not the way to go about cutting the costliness of what’s been dubbed the One Big Beautiful Bill.

And she’s also willing to cross the Capitol and lobby hesitant Republican senators herself, she said.

“We are ready and willing to go to the Senate side and talk to the senators about the importance of keeping the SALT cap where it is,” Kim said in an interview.

And while during House negotiations last month, she was willing to draw a line in the sand over SALT and whether she’d support a proposal without a certain increase to the cap, Kim is playing the waiting game now.

“First, I would like to know if we can convince the senators how important it is to keep it as it is,” she said. “If there are any changes, I hope there is not a significant change. Without seeing the final number, I can’t comment on whether or not I would be comfortable supporting the bill when it comes back to the House.”

Still, she warned: “They need us, and if there is any alteration in the Senate bill, they will have a hard time getting it voted on again and getting it out of the House.”

“We are united on this,” she said of the group of Republicans from the high-tax states.

The $10,000 cap on SALT deductions was levied in 2017 as part of the Tax Cuts and Jobs Act spearheaded by the first Trump administration. The cap is set to expire at the end of the year.

In 2017, about 31% of households used the SALT deduction on their taxes, according to a congressional analysis. But that decreased to just 9% by 2022, the analysis found.

_____


©2025 MediaNews Group, Inc. Visit ocregister.com. Distributed by Tribune Content Agency, LLC.

 

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