Congress Pulls Tax Cut All-Nighter With SALT Fight Unresolved

House lawmakers debated the contours of President Donald Trump’s tax cuts throughout the night as they race to meet a self-imposed deadline to approve the legislation by Thursday.

Republicans started the hearing at 1 a.m. Washington time on Wednesday despite unresolved policy disputes that threaten to tank the bill, including a fight over expanding the state and local tax deduction, and curbing spending on Medicaid benefits and clean energy credits.

“We are almost there on everything,” Speaker Mike Johnson said early Wednesday. He is pushing to pass the bill out of the House this week.

Republicans are expected to release a revised version of the bill that includes compromises on SALT and spending cuts, but that draft had yet to be made public as debate unfolded in the US Capitol.

The tax package serves as the centerpiece of Trump’s economic agenda. The legislation renews his 2017 tax cuts and would create a slew of new tax benefits he promised voters on the campaign trail, including eliminating taxes on tips and overtime pay.

Representative Virginia Foxx, the Republican chair of the House Rules panel, said lawmakers were still drafting the revised version of the bill, acknowledging that she “certainly can’t control the time that it will be ready.”

During the meeting, Democrats berated Republicans for holding the hearing at such an unconventional hour with key elements of the bill still not public.

“This is a farce, an outrageous insult to the people of this country to bring up a 1,000-page bill at one in the morning,” said Representative Jim McGovern, the top Democrat on the Rules Committee. “A bill that’s still being written, by the way by Republicans as we speak, in a backroom somewhere.”

The Rules Committee meeting is the final step before the bill can advance to the House floor.

Axios reported late Tuesday that lawmakers were weighing a compromise that would raise the SALT deduction to $40,000 a year for people making as much as $500,000. The income phaseout would grow 1% a year over a decade, and then the deduction would become permanent, according to the news site.

Such an offer could quell some of the concerns of members from New York, New Jersey and California, who rejected an earlier $40,000 cap that lasted only for four years. After that, the limit would snap back to $30,000 with a $400,000 income limit.

Trump’s bill — as drafted — calls for a $30,000 SALT cap, up from the $10,000 currently available.

Several members from high-tax states have threatened to scupper the bill if the SALT write-off is not substantially increased. Those demands have frustrated Trump, who during a meeting with House Republicans on Tuesday, directed them to not let SALT derail the broader tax package.

Earlier: Trump Loses Patience With SALT Demand as Tax Bill Faces Snag

Fiscal conservatives are also pushing to increase the measure’s spending cuts before the bill heads to the Senate, where members have signaled they plan to revise key portions of the House plan.

House conservatives stalled the bill for two days over those deficit concerns before acquiescing to advance the legislation out of the House Budget Committee late Sunday.

Lawmakers are pushing to move up work requirements for Medicaid recipients, initially slated to go into effect in 2029. Also under discussion is the timeline for phasing out green energy tax breaks. This could also hurt large financial institutions that have purchased renewable credits to use against their tax liabilities as part of project financing deals.

The potential concessions to conservatives are causing friction with moderate Republicans, who are wary that social safety-net cuts could harm them in the midterm elections.

If talks in the House stall this week, that could portend trouble for Congress avoiding a US government default this summer. Lawmakers are using the tax bill to raise the US debt ceiling by as much as $5 trillion before a projected August payment deadline.

Once the House passes the bill, the Senate could take weeks — if not months — to revise and approve the legislation.

--With assistance from Gregory Korte.

To contact the reporters on this story:
Jarrell Dillard in Washington at jdillard11@bloomberg.net;
Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story:
Laura Davison at ldavison4@bloomberg.net

Brendan Murray

© 2025 Bloomberg L.P. All rights reserved. Used with permission.