SALT deduction fight slows tax deal as lawmakers seek relief

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A handful of lawmakers demanding inclusion of state and local tax relief in a congressional deal helped snarl proceedings in the House of Representatives on Tuesday, turning up pressure make SALT a part of any tax agreement that passes Congress.

Four New York Republicans angry about the lack of SALT relief in a $78 billion tax-break deal held up action on an unrelated immigration bill, before switching over to vote yes. House Speaker Mike Johnson, a Louisiana Republican, is reportedly set to meet with SALT-deduction advocates and others tonight.

A group of Republicans in the SALT caucus have complained the tax bill doesn’t raise the $10,000 cap on federal deductions for state and local taxes. The deduction — a priority for members from New York and California — benefits higher-income taxpayers.

The tax deal also includes a boost to the child credit and could lead to the creation of more than 200,000 new homes for low-income families. Johnson could schedule a vote on the measure as soon as this week.

Now read: Bipartisan deal could boost the child tax credit — but wouldn’t bring back the generous 2021 version. Here’s what it would mean for your taxes.

The Tax Cuts and Jobs Act capped SALT at $10,000 a year, consisting of property taxes plus state income or sales taxes, but not both, according to the Tax Foundation.

Before the TCJA, notes the Tax Foundation, 91% of the benefit of the SALT deduction was claimed by those with incomes above $100,000 and concentrated in six states: California, New York, New Jersey, Illinois, Texas and Pennsylvania.

The four New York Republicans who held up action and then later switched their votes today were Reps. Anthony D’Esposito, Andrew Garbarino, Nick LaLota and Mike Lawler.

One option Republicans have asked Johnson to consider would be raising the cap to $20,000 for married couples, LaLota said, according to Roll Call.

And see: Bipartisan tax deal could lead to 200,000 new affordable rental units. It’s a ‘modest and important’ effort, expert says.

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