Johnson reaches tentative $40,000 SALT deduction cap deal for Trump’s bill

Republicans Reach Tentative Deal on ‘SALT’ Deductions

House Speaker Mike Johnson has struck a tentative agreement with a group of blue state Republican lawmakers to increase the cap on state and local tax deductions, commonly known as “SALT,” to $40,000 in President Donald Trump’s proposed legislation. The new cap, up from $30,000, would apply per household for taxpayers earning less than $500,000 annually.

The deal, which still needs approval from GOP hardliners who oppose raising the SALT cap, was first reported by Politico and confirmed by Fox News. This agreement comes amid high-stakes negotiations within House GOP factions over taxes, Medicaid, and green energy subsidies as they work on crafting President Trump’s ambitious bill.

SALT deduction caps primarily benefit residents in high-cost-of-living areas such as New York City and Los Angeles. Republicans from these regions have emphasized the importance of raising the cap, arguing that failing to do so could jeopardize the party’s majority in the 2026 midterms.

Conversely, Republicans from lower-tax states remain cautious about increasing the deduction cap, fearing that it could encourage high-tax policies in blue states. The divide within the party highlights the complexity of balancing the interests of different regions while working on tax reform.

It is yet to be seen whether all GOP members will support the proposed increase in the SALT deduction cap. However, the tentative deal signifies progress in bipartisan negotiations and showcases the party’s efforts to address key tax issues in Trump’s legislation.

Overall, the agreement demonstrates a willingness among Republican lawmakers to find common ground and compromise on critical issues, even amidst differing viewpoints within the party. As discussions continue, the final decision on the SALT deductions will play a significant role in shaping the future of tax policy in the United States.

Written by Bradford Betz, a Fox News Digital breaking reporter covering crime, political issues, and more.