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The latest proposal would lift the cap on the state and local tax deduction to $80,000.
House Democrats have again revised their plan for rolling back the $10,000 cap on the state and local tax deduction, raising the limit to $80,000 in an amendment released late Thursday that they plan to embed in their sweeping domestic spending proposal.
Democrats were pressing Friday to vote on the budget bill, which totals nearly $2 trillion, along with a roughly $1.2 trillion infrastructure package. What to do about the SALT provision is one of the key issues lawmakers negotiating the spending bill have been trying to hash out in recent days as they prepare to put the legislation to a vote.
A version of the legislation they presented earlier this week would have raised the cap to $72,500 through 2031. The existing $10,000 limit is set to expire at the end of 2025.
The new plan with the $80,000 cap, like the previous version, would apply the higher cap retroactively beginning in 2021. The higher cap would then remain in place through the end of 2030. Then, for 2031, the $10,000 cap would be reimposed for a year.
A group of House lawmakers from New York and New Jersey, who have advocated to lift the cap since it was imposed in 2017, indicated that they were satisfied with the latest iteration of the proposal.
"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," Reps. Josh Gottheimer and Mikie Sherrill, of New Jersey and Rep. Tom Suozzi of New York, said in a statement.
But the fine tuning of the House plan could end up being moot.
Democrats can't lose any votes in the Senate to pass their spending package in that chamber. And at least two senators who caucus with the party—Bernie Sanders, of Vermont, and Bob Menendez, of New Jersey—back a different option that would leave the $10,000 cap in place, but waive it for people earning less than about $400,000 to $550,000 a year.
Meanwhile, Sen. Elizabeth Warren, a Massachusetts Democrat, made clear on Thursday that she hadn't committed to supporting any of the SALT compromises put forward so far.
Bill Lucia is a senior editor for Route Fifty.