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.
It remains unclear whether GOP hardliners who oppose raising the SALT cap deductions will sign off on the measure.
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.
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.
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.