House Democrats modify SALT provision in spending bill

House Democrats late Thursday modified the provision in their social spending package that would raise the cap on the state and local tax (SALT) deduction.

The new version of the provision would raise the cap from $10,000 to $80,000, and have the limit in place at that level through 2030. The cap would then return to $10,000 for 2031.

A previous version of the bill would have set the cap at $72,500 through 2031.

The change to the SALT deduction provision came as lawmakers were making last-minute adjustments to the spending package before an expected vote Friday.

Reps. Josh Gottheimer (D-N.J.), Thomas Suozzi (D-N.Y.) and Mikie Sherrill (D-N.J.), three lawmakers who pushed for SALT deduction cap changes to be included in the spending bill, praised the modified provision.

“This agreement to address the cap on our State and Local Tax (SALT) deduction will effectively eliminate the undue burden for nearly all of the families in our districts who’ve been unfairly double taxed for the last four years,” the lawmakers said in a statement.

The $10,000 cap on the SALT deduction was created by Republicans’ 2017 tax law, and is set to expire after 2025. 

Democrats from high-tax states such as New York and New Jersey have been pushing to undo the cap, arguing that the limit hurts their states and residents. But the issue is challenging for Democrats because a full repeal of the cap would largely benefit high-income households.

Sens. Bernie Sanders (I-Vt.) and Bob Menendez (D-N.J.) have criticized House Democrats’ approach on SALT and have proposed an alternative way to make changes to the cap. The two senators are proposing leaving the cap at $10,000 but exempting taxpayers with incomes under a level between $400,000 and $550,000.

Updated Nov. 5 at 6:36 a.m.