House Republicans are actively discussing raising the state and local tax (SALT) deduction cap, with support from President Donald Trump and congressional leaders, as part of broader negotiations for a must-pass tax bill this year.

Currently capped at $10,000, the SALT deduction limits the amount taxpayers can deduct for local income and property taxes from their federal tax returns. Representatives from high-tax states like New York, New Jersey, and California are pushing to increase the cap to provide relief for constituents burdened by higher property values and tax rates.

GOP Representative Nicole Malliotakis indicated discussions include possible adjustments, such as raising the cap, adding income restrictions to exclude billionaires, addressing the marriage penalty, and evaluating deductions for second properties. She emphasized that raising the cap to $20,000 might not be sufficient to address the needs of taxpayers in affected districts.

How to handle the SALT cap will be a pivotal point in Congress’s negotiations as Republicans work to draft a new tax bill. The legislation is expected to extend key provisions of the 2017 Tax Cuts and Jobs Act (TCJA), set to expire at the end of 2025. Republican lawmakers from districts most affected by the SALT cap have signaled their willingness to block the bill if the deduction is not adequately addressed, leveraging the GOP’s slim majority in the House.

Discussions gained momentum after members from high-tax states met with Trump at his Mar-a-Lago resort earlier this month. New York Representative Mike Lawler, who is set to meet with Trump at the White House this week, stated that the president is supportive of resolving the SALT cap issue as part of the proposed tax reforms.

"He is in full agreement with us," Lawler said, noting that Trump's backing will be essential in navigating opposition from conservative Republicans who view the SALT cap as a subsidy for states with high taxes.

The SALT cap was first introduced in Trump’s 2017 tax legislation as a cost offset for other tax cuts. However, shifting political dynamics—particularly Republican gains in traditionally Democratic districts like New York and California—have increased pressure on the party to revisit the cap.

Alongside adjustments to the SALT deduction, the GOP is also considering other tax proposals, including eliminating federal taxes on overtime pay, tips, and Social Security benefits. While these measures could provide broad tax relief, they also have the potential to significantly increase the cost of any final tax bill.

House Speaker Mike Johnson has expressed a desire to pass the tax bill by May. Representative Nick LaLota of New York indicated that lawmakers plan to bring a detailed proposal for a new SALT cap to the White House, complete with an explanation of why the suggested amount is critical.

While there is consensus on addressing the SALT cap, disagreements remain over the specifics. Lawler has proposed lifting the cap to $100,000 for individuals and $200,000 for married couples filing jointly, emphasizing the importance of finding a balanced solution.

"Any increase is a win for my constituents," said Malliotakis. "Any money we can keep in their pockets is a step in the right direction."

Moderate Republicans, including Lawler, remain determined to secure changes to the SALT deduction before advancing the broader tax package, underscoring the high stakes for GOP lawmakers.

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