House votes to increase SALT deduction

WASHINGTON (NEXSTAR) - House Speaker Mike Johnson (R-La.) reached a deal with Republican House members from blue states who pushed for an increase in the SALT deduction cap in President Donald Trump's 'big, beautiful bill', allowing it to pass the House. 

The Big Beautiful Bill that passed the House on Thursday would increase the SALT deduction cap from $10,000 to $40,000. 

Rep. Mike Lawler (R-N.Y.) led the charge in the House to get the SALT cap raised. Lawler said taxpayers in his district pay some of the highest property taxes in the country and should be able to deduct those from their federal taxes. 

Under the 2017 Tax Cuts and Jobs Act, Congress capped the amount of state and local taxes (SALT) people could deduct from their federal returns. 

Most Republicans said the SALT cap would save the government money. The Congressional Research Service estimated eliminating the SALT deduction cap would cost $120 billion next year. 

"They're saying, when you live in a big blue state, you pass less federal taxes than Texans," said Sen. Ted Cruz (R-Texas). "When you have an unlimited deduction for state and local tax, what it does is it basically subsidizes the big, blue states." 

Democrats, and blue state Republicans said a low SALT deduction cap essentially forces people to pay double taxes. 

"States like New York, New Jersey, Illinois and California are donor states. We regularly send billions of dollars more to the federal government than we get back," said Rep. Hakeem Jeffries (D-N.Y.), the House Minority Leader. 

President Donald Trump said the blue states are the only ones who want the cap raised. 

"This is an issue of double taxation," Lawler said. "It's an issue of fairness." 

The Congressional Research Service said the largest percentage of people who take the SALT deduction earn more than $199,999.