The head of the conservative House Freedom Caucus predicted Monday that Congress will raise the $10,000 cap on the state and local tax deduction, a sign that deficit hawks will not stand in the way of SALT changes later this year.
“We will do something on it, there is no question about it,” Maryland Representative Andy Harris said on the Fox Business network on Monday.
Harris said Congress will surely double the deduction for joint filers to $20,000, eliminating the current so-called marriage penalty because the deduction is capped at $10,000 whether it’s a single taxpayer or a couple. He added that lawmakers should index it to increase with inflation, aligning it with other major tax provisions that automatically adjust over time as prices rise.
The SALT changes will be part of a sweeping tax bill that congressional Republicans are crafting with the hopes of passing it before the end of the year. The legislation will also renew many of President Donald Trump’s first-term tax cuts, including rate cuts for individuals and deductions for small business owners.
Harris said other proposals are on the table, including plans to to raise the current $10,000 cap to $15,000 or $20,000 but he didn’t predict the likelihood of those passing.
The House last month passed a budget proposal as the first step toward enacting the tax package, using a process that won’t require Democratic votes. The proposal, which would pair tax cuts with $2 trillion in spending cuts and a $4 trillion debt ceiling increase, is currently being considered by the Senate.
Senate Republicans are mulling using a budget gimmick to allow themselves to cut taxes by trillions more in order to make extension of the 2017 tax cuts permanent. The gimmick would also allow them to add SALT changes and end taxes on tips and overtime pay to the bill.
Trump told Fox News in an interview that aired on Sunday reiterated that he would like to see a change to the SALT cap and predicted it would help vulnerable House Republicans win swing districts.
“I’d love to see something on SALT,” Trump said. “I also think it will have a big impact on the election.”
Republicans from high tax states like New York, New Jersey and California have said they will not support any tax package without SALT change. Speaker Mike Johnson can only afford a handful of defections on the tax package given his narrow majority.
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