House Republicans Split Over SALT Deduction Cap as Key Tax Deal Emerges
House Republicans remain sharply divided over a proposed increase in the State and Local Tax (SALT) deduction cap, a key component of what former President Donald Trump has dubbed his “big, beautiful bill.”
The tentative tax agreement, first reported by Politico and confirmed by Fox News, is part of ongoing negotiations among House GOP factions as they attempt to finalize a sweeping legislative package that includes reforms on tax policy, Medicaid, and green energy subsidies.
At the center of the internal dispute is whether to lift the cap on SALT deductions, a move that would largely benefit taxpayers in high-cost, high-tax states like New York and California. The issue has created a growing rift between blue-state Republicans, who support raising the cap, and fiscal conservatives from lower-tax regions who oppose the change.
Republicans from states such as New York, New Jersey, and California argue that failing to address the SALT cap could jeopardize their re-election chances and potentially cost the GOP control of the House in the 2026 midterm elections. For them, lifting the cap is seen as politically essential and economically justifiable for their constituents.
But hardline conservatives from lower-tax states, including many members of the House Freedom Caucus, warn that increasing the deduction cap would effectively subsidize what they view as fiscally irresponsible behavior by Democrat-led states.
The tension has placed House Speaker Mike Johnson (R-La.) in a difficult position as he tries to balance the competing demands of his caucus while securing enough support to move the broader legislative package forward. Speaker Johnson appeared alongside former President Trump on Capitol Hill Tuesday as they worked to rally GOP unity behind the bill.
As negotiations continue, it remains unclear whether GOP leadership can bridge the divide and secure enough votes to pass the final measure. With a narrow House majority, even a small rebellion within Republican ranks could derail the legislation.
The SALT cap, originally imposed under the 2017 Trump tax cuts, limits the amount of state and local taxes that taxpayers can deduct on their federal returns. Proposals to raise or eliminate the cap have resurfaced repeatedly in recent years but have failed to gain enough bipartisan traction.
