Rep. Lalota: US Republicans and Democrats Far from SALT Agreement

Rep. Lalota: US Republicans and Democrats Far from SALT Agreement

Negotiations over the SALT cap in the One Big Beautiful Bill Act continue to stall, with Republicans and Democrats remaining far from an agreement. The SALT (State and Local Tax) cap has been a contentious issue, with House Republicans pushing for a quadrupling of the $10,000 cap to $40,000, while Senate Republicans have been more resistant to significant changes.

The House version of the bill, passed with 218 votes, includes a $40,000 cap on SALT deductions. However, the Senate has been pushing to lower this cap, with the Senate Finance Committee initially keeping it at $10,000. Senate Republicans argue that SALT deductions primarily benefit high-income earners in blue states and subsidize spending by Democratic-led state and local governments.

Rep. Nicole Malliotakis (R-NY) expressed doubt that the Senate would significantly adjust the cap, stating, "I really doubt it will be adjusted much if they want this bill to become law" [1]. Rep. Mike Lawler (R-NY) has been firm in his stance, stating that the House's agreement is non-negotiable.

The Senate's reluctance to raise the SALT cap is partly due to its desire to make key business tax cuts permanent. The Senate legislation includes provisions to permanently allow companies to immediately deduct domestic research and development costs, and to restore interest deductibility for investments. These provisions are seen as pro-growth measures that could boost economic output and offset the fiscal cost of other tax cuts.

Despite the Senate's initial resistance, Senate Majority Leader John Thune aims to begin Senate action by the middle of this week and complete passage by the weekend. However, hardline Republicans, including Sen. Ron Johnson (R-WI), are pushing back on the schedule, seeking more time to negotiate additional savings.

The SALT cap issue is just one of many contentious points in the One Big Beautiful Bill Act. The legislation also faces opposition over Medicaid cuts and other provisions. The Senate parliamentarian has not yet ruled on whether the legislation qualifies for the privileged status needed to circumvent the 60-vote filibuster, adding further uncertainty to the process.

As negotiations continue, both Republicans and Democrats remain far from an agreement on the SALT cap. The outcome of these negotiations will have significant implications for the final tax bill and its impact on state and local governments, high-income earners, and the overall economy.

References:

[1] https://www.washingtonexaminer.com/policy/finance-and-economy/3453000/salt-cap-senate-republicans-could-score-political-win-fight-gop/
[2] https://www.investing.com/news/economy-news/trump-us-senate-republicans-face-test-as-big-beautiful-bill-deadline-looms-4105277
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3SQ02U:0-senate-republicans-cannot-force-us-postal-service-to-scrap-evs-parliamentarian-says/