SALT-Cap Issue Emerges as Potential Block to Biden Economic Bill

As Senate Democrats work on a slimmed-down version of President Joe Biden’s long-term economic package, a move to expand the federal deduction for state and local taxes looms again as a potential late-stage hurdle.

House Democrats representing high-tax states are still prepared to block any deal on a climate, tax-hike and deficit reduction bill if the legislation doesn’t include an expansion of the valuable write-off, known as SALT. The group repeatedly threatened to sink a bigger version of Biden’s agenda last year.

“No SALT, no dice,” Representative Josh Gottheimer, a New Jersey Democrat, said in an interview. “I’ve ...