Changes to ‘Big, Beautiful Bill’ to Cost Extra $140B Over 10 Years, Tax Panel Estimates
Want some extra SALT with those budgetary fries? It will cost you.
The congressional Joint Committee on Taxation has released its latest cost estimates on the latest House budget proposal, which includes a quadrupling of the cap on state and local tax (SALT) deductions on federal taxes.
The projections suggest late compromises on issues such as the SALT cap will make the House of Representatives’ budget framework cost an extra $140 billion over 10 years.
In the closing moments of House Speaker Mike Johnson’s push to pass what President Donald Trump calls the “big, beautiful bill,” he cut a deal with blue state Republicans in the House to quadruple to $40,000 the cap on state and local tax deductions.
A SALT deduction allows residents of high-tax states to deduct their state and local taxes on their federal tax returns. Under Trump’s first-term 2017 tax cuts—which are set to expire at the end of this year—taxpayers can deduct up to $10,000 on their returns under SALT.
Fiscal hawks in the House, especially those in the conservative Freedom Caucus, criticized the SALT increase as a bailout for states with Democrat governors, while pro-SALT representatives argue that it’s justified because states like California and New York are net contributors of tax revenues to the federal government.
When a group of pro-SALT Republicans threatened to sink the Republican bill, Johnson, R-La., won them over by raising the cap from his first offer of $30,000 to $40,000, although only for households making under $500,000 a year.
Johnson also granted cost-saving concessions to Freedom Caucus members, such as earlier expiration of Biden-era green energy tax credits.
Now, the Joint Committee on Taxation has its estimates for how much the last-minute changes to tax policy will cost.
All told, from fiscal year 2025 to fiscal year 2034, it estimates a $3.94 trillion “cost” of the bill’s tax provisions.
That’s a $140 billion increase in projected revenue loss from the $3.8 trillion cost estimated by the Joint Committee on Taxation on May 14, before the SALT cap was upped to $40,000.
Politico reported that the last-minute SALT change “cost an additional $129 billion,” as reflected in the Joint Committee on Taxation report.
It remains to be seen how the Senate might alter this bill.
Of Johnson’s concessions to blue state Republicans on increasing the cap on SALT deductions, Senate Majority Leader John Thune, R-S.D., has told the press, “It’s not an issue that gains or loses votes here in the Senate. This is purely a House play designed to deal with the political challenge they have to get 218.” That number represents a majority in the 435-seat House.
