House Speaker Mike Johnson has reached a tentative deal with blue state Republican lawmakers to boost the cap on state and local tax deductions, or SALT, to $40,000 in President Donald Trump’s so-called “big, beautiful bill,” Republican sources confirmed to Fox News late Tuesday.
The proposed cap – which is up from $30,000 – would be per household for taxpayers making less than $500,000 per year.
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It remains unclear whether GOP hardliners who oppose raising the SALT cap deductions will sign off on the measure.
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The tentative agreement, first reported by Politico and confirmed by Fox News, comes as House GOP factions have been engaged in high-stakes debates on taxes, Medicaid, and green energy subsidies while crafting the president’s “big, beautiful bill.”
SALT deduction caps primarily benefit people living in high-cost-of-living areas like New York City, Los Angeles, and their surrounding areas.
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Republicans representing those areas have framed raising the SALT deduction cap as an existential issue, arguing that a failure to address it could cost the GOP the House majority in the 2026 midterms.
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Meanwhile, Republicans representing lower-tax states are largely wary of raising the deduction cap, believing that it incentivizes blue states’ high-tax policies.
Fox News Digital’s Elizabeth Elkind contributed to this report.
