Senate Deadlocked on SALT, With Draft Bill Showing Current $10,000 Cap

(Bloomberg) — The Senate’s version of President Donald Trump’s tax bill calls for a $10,000 cap on the state and local tax deduction — a placeholder figure as Republicans remain divided over the valuable tax break.

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The draft bill — slated to be released later on Monday — includes the current $10,000 SALT cap, according to a person familiar with the matter. But the Senate will continue to negotiate the deduction as it aims to pass the legislation by a self-imposed July 4 deadline.

The House version of the bill calls for a $40,000 SALT cap, with some limits for claiming the write-off based on income. Some House lawmakers from high-tax states have threatened to block the legislation if the Senate lowers that cap.

The $10,000 language suggests that the Senate is willing to engage in a high-stakes and politically divisive negotiation to reach a SALT cap that is far lower than the $40,000 the House agreed upon.

Representative Mike Lawler of New York called a $10,000 cap “DEAD ON ARRIVAL.” Fellow New York Representative Nicole Malliotakis said the Senate draft is “insulting” and a “slap in the face.”

“The $40,000 SALT deduction was carefully negotiated along with other tax provisions by the House of Representatives and we all had to give a little to obtain the votes to pass the Big Beautiful Bill,” she said in a post on X. “We need to recognize that we have members representing blue states with high taxes that are subsidizing many red districts across the country.”

The Republican leaders of the SALT caucus, Andrew Garbarino of New York and Young Kim of California, said that $40,000 cap “negotiated in good faith with the Speaker and the White House must remain in the final bill.”

Senate Majority Leader John Thune said on Fox News Sunday there is no real interest among Republicans who hail from low tax states to raise the SALT cap to the $40,000 level called for in the House-passed version.

“I think at the end of the day we’ll find a landing spot. Hopefully that will get the votes we need in the House, a compromise position on the SALT issue,” Thune said.

On Monday, Thune signaled that the July 4 deadline was still possible.

“So there’s a lot of work between now and the July 4 break, but that’s absolutely right,” Thune told Fox News. “We’re going to get this done, and it’ll be out of the Senate, and hopefully we’ll get it on the president’s desk before the Fourth of July.”