House Republican leaders and GOP members from large blue states have agreed to increase the state and local tax (SALT) deduction to $40,000 in the party's reconciliation bill, Speaker Mike Johnson, R-La., announced.
"That is the agreement we came to," Johnson told CNN on Wednesday, Bloomberg reported.
"I think the SALT caucus, as they call themselves, it's not everything they wanted, but I think they know what a huge improvement that is for their constituents and it gives them a lot to go home and talk about."
Although it had been proposed to raise the $10,000 SALT deduction limit to $30,000, blue state lawmakers said that was not enough. Their resistance threatened to delay or sink President Donald Trump's "one, big, beautiful" spending bill.
The $40,000 SALT limit will phase out for annual incomes greater than $500,000, Bloomberg reported, and the cap is the same for both individual taxpayers and married couples filing jointly.
The income threshold and the $40,000 figure would grow at 1% annually, The Wall Street Journal reported. The $10,000 in current law and $30,000 in the current version of the GOP proposal wouldn't increase at all annually.
However, the SALT deal did not guarantee passage of the overall bill, as conservatives push for more spending cuts to offset the tax reductions in Trump's economic package.
Maryland Republican Rep. Andy Harris, chair of the House Freedom Caucus, told Newsmax on Wednesday morning that "actually, we're further away from a deal because that SALT cap increase, I think, upset a lot of conservatives."
"Conservatives are pushing for some balancing spending reductions," Harris said. "We actually stopped negotiating just before midnight because we actually had a deal that was then pulled off the table. So, this bill actually got worse over night."
Johnson on Tuesday had vowed that the House would vote by Thursday on Trump's domestic agenda bill. Harris, though, said that isn't going to happen.
Trump himself visited Capitol Hill on Tuesday to implore House Republicans to drop their fights over his big tax cuts bill and get it done, using encouraging words but also the hardened language of politics over the multitrillion-dollar package before planned votes this week.
During a more than hour-long session, Trump warned Republicans not to touch Medicaid with cuts, and he told New York lawmakers to end their fight for a bigger local deduction. The president, heading into the meeting, called himself a "cheerleader" for the Republican Party and praised Johnson's leadership.
The Associated Press contributed to this story.
Charlie McCarthy ✉
Charlie McCarthy, a writer/editor at Newsmax, has nearly 40 years of experience covering news, sports, and politics.
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