Republicans agree on temporary state tax deduction increase

Republicans in Congress have reached a temporary deal to raise the cap on state and local tax (SALT) deductions as part of President Donald Trump’s tax plan. The agreement, led by House Speaker Mike Johnson, would increase the SALT deduction limit from $10,000 to $40,000 for five years. This change aims to help people in high-tax states like New York, New Jersey, and California, where residents often pay more in local taxes.

The deal comes after tough talks between House and Senate Republicans. Many Senate Republicans wanted to keep the $10,000 cap, saying a higher limit mostly helps wealthy people in Democratic states. However, lawmakers like Rep. Mike Lawler from New York pushed hard for the increase, arguing it would benefit over 90% of his constituents. The plan also includes a $500,000 income limit for households to qualify for the $40,000 deduction.

To pay for the tax cuts, the bill suggests reducing spending on programs like Medicaid, food assistance, and college financial aid. It also adds funding for the military, border patrol, and immigration enforcement. Some Republicans, like Rep. Nick LaLota, are unhappy with the five-year limit and want the $40,000 cap to be permanent. Despite these concerns, Lawler believes the deal will pass in Congress. This agreement is a key step in moving Trump’s tax bill forward, though some issues, like Medicaid cuts, still need to be worked out. The goal is to finalize the bill before the July 4 deadline.