Rep. Tom Suozzi, D-N.Y., is expecting an agreement this week for changes to the $10,000 limit on the federal deduction for state and local taxes.

SALT has quickly become a bargaining tool for lawmakers from tax-exempt states such as New York and California. This measure threatens to thwart the Democrats multitrillion-dollar spending bill.

Although the bill can be passed without Republican support, Democrats still need the support of nearly every member of Congress and all Democrats senators.

Suozzi said that if they attempt to push a bill without fixing SALT, it will be difficult to get enough votes to pass the bill.

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However, he is optimistic about the deal as the Democrats’ plan advances to the House Rules Committee.

Suozzi stated that he feels very positive about the deal. The right things are happening.

This issue is being addressed by many others.

The SALT cap has been an ongoing battle since former President Donald Trump added the limit during his signature 2017 tax overhaul. 

This is because Americans can’t write off more $10,000 in property or state income taxes when they itemize their deductions on their federal returns.

The cap has been criticized by lawmakers as it is causing harm to local residents, and even driving some people to move to states with lower taxes.

However, a complete repeal might be very costly. According to the Joint Committee on Taxation (JCT), SALT limit deductions generated $77.4 million in its first year. A full repeal of 2021 could cost $88.7 trillion, or more, in future years. The SALT cap is still being opposed by the majority of Republicans.

Although rumors circulated about temporary relief for SALT in the form of a two-year plan, Suozzi stated that he is pushing for a longer-term solution when questioned by reporters. He stated that he was still pushing for the full repeal.

The SALT deduction cap has also been a focus for other lawmakers, including House Speaker Nancy Pelosi, D-Calif., who has said it’s an “important priority” in the reconciliation bill.  

CNBC did not receive a response from Speaker Pelosi’s office regarding the negotiation. 

Some lawmakers believe the proposal will primarily benefit wealthy taxpayers. 

The top 20% of Americans may receive more than 96% of the benefit of a SALT cap repeal, according to a Tax Policy Center report, affecting only 9% of American households. 

In the meantime, several high-tax states now offer SALT cap workarounds for pass-through business owners, allowing some companies to bypass the deduction limit by using a state levy to cover some of the owner’s state income taxes.