SALT Cap Increased in GOP Tax Bill to Assuage Swing Districts

The cap on the state and local tax deduction would be increased to $30,000 under House Republicans’ tax bill unveiled Monday.

Taxpayers making more than $400,000 would face a lower cap. Married couples filing separately would be limited to a $15,000 deduction each and a $200,000 income screen.

The compromise increase was one of the last sticking points Republicans resolved before unveiling legislation that otherwise mostly extends the expiring tax law Republicans passed in 2017.

The 2017 law capped the SALT deduction to $10,000 for filers to constrain the costs of the bill that otherwise cut rates across the board. But Republicans from high-tax states like New York insisted any renewal provide relief to their constituents seeking to avoid double-taxation on what they’ve already paid to states and localities.

The increase will nevertheless likely see pushback on the House floor. Five Republicans from New York and California last week rejected that proposed increase as insufficient.

The increase ranks among the more expensive additions to Republicans’ tax bill and will likely also be met with resistance by fiscal hawks seeking to use the budget reconciliation bill to decrease the deficit.