Blue-state Republicans are heading to a meeting with Secretary Scott Bessent after turning down a recent offer from the Trump administration to raise the cap on the state-and-local tax (SALT) deduction.
Representatives Mike Lawler, Young Kim, and Nick LaLota announced that they would not accept the Treasury’s proposed deal, which included a $40,000 cap but altered income thresholds and the indexing method. While the offer aimed to save money compared to the House’s plan, it would result in fewer qualifying taxpayers.
How the Tax Bill as SALT is Shaping U.S. Tax Policy
Kim mentioned they are negotiating in good faith, but LaLota criticised the offer as unrealistic and said he would not attend the meeting unless the Senate presents a serious proposal. He expressed that the current offer disregards previous compromises supported by most House Republicans.
The other SALT Republicans will meet at the Treasury at 5:30 p.m. on Thursday. The SALT deduction is one of the issues Congress must resolve to pass President Trump’s domestic policy bill before the July 4 deadline. The Tax Bill as SALT has become a key issue in current U.S. tax reform debates
LaLota expressed frustration, comparing the situation to being treated poorly by a car salesman, leading to feelings of humiliation and disgust.
Tax Bill as SALT is gaining momentum as President Trump accelerates the timeline to pass it, following a tentative compromise.
Meredith Lee Hill and Benjamin Guggenheim contributed to this report.
Tax Bill Deadline Accelerated by Trump Amid SALT Deal Breakthrough
President Donald Trump increased pressure on Congress to quickly pass his tax-cut bill as Republicans made progress on the state and local tax deduction.
He stated on Truth Social that the House must send the bill to him before July 4, expressing confidence that it could be done. This new deadline marks a change for Trump, who had earlier said missing the Independence Day goal wouldn’t be a disaster.
The tentative deal suggests a plan to raise the SALT deduction limit to $40,000 per year for five years, according to Senator John Hoeven.
A breakthrough in the Tax Bill as SALT negotiations may accelerate Trump’s tax reform agenda — here’s what’s changing.
New York Republican Mike Lawler, a key negotiator, confirmed a deal that he believes will pass, offering full SALT relief to over 90% of his constituents.
However, some members of the SALT Caucus are not in agreement. Nick LaLota from New York opposes the deal, arguing it would return to the $10,000 cap he has criticised.
He views supporting this deal as hypocritical and believes his constituents would see it the same way. This division could be an issue for Republicans in the closely divided House. Lawler, LaLota, and other GOP lawmakers want to increase the deduction cap to $40,000 for ten years, unlike the original Senate draft, which kept it at $10,000.
The recent deal includes a plan to phase out tax deductions for individuals earning over $500,000.
Additionally, Republicans intend to remove proposed limits on deductions for state and local taxes for pass-through businesses.
Previously, many business owners avoided the SALT cap due to legal workarounds from several states. The House version of Trump’s tax and spending package aimed to limit these workarounds.
The SALT issue has caused delays for Trump’s tax bill in the Senate. Senate Republican Leader John Thune is addressing differing views among conservatives and moderates regarding cuts to social programs and clean energy tax credits.
He needs to resolve these issues to gather enough votes for the bill, which is expected to be voted on Saturday. This package is a key part of Trump’s economic agenda, extending some tax breaks from 2017 while adding temporary benefits for various groups.
Tax Bill as SALT is now at the forefront of U.S. tax reform discussion. President Trump is pushing to finalise the legislation faster than expected, following a tentative compromise that could reshape deductions for high-tax states. Lawmakers are scrambling to solidify the deal as the political clock ticks down.
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