Two New York Republican lawmakers promised to block their party’s signature tax legislation unless GOP leaders raise a proposed $30,000 limit on the federal income tax deduction for state and local taxes.

Their public declarations on Monday shortly after House Republicans released a draft version of their tax bill underscores the difficulty party leaders will have securing passage as lawmakers from high-tax states demand greater increases in the SALT limit, politically vulnerable Republicans chafe at Medicaid cuts and fiscal conservatives press for more spending reductions.

Representative Mike Lawler, a New York Republican, called the proposed SALT limit “woefully inadequate” and said in a Bloomberg Television interview he is a “hard no” on the legislation unless the cap is increased.

Nick LaLota, another New York Republican, said he was “insulted” by the limit and would be a “hell no” vote against it. 

Three other Republicans — New York’s Andrew Garbarino and Elise Stefanik and Young Kim of California — have previously rejected a $30,000 SALT cap, calling it insufficient and saying they would vote against a bill including such a limit.

The House tax committee’s draft bill to renew President Donald Trump’s 2017 tax cuts also would impose a new income limit on the deduction, phasing it out for individuals earning more than $200,000, or married couples earning more than $400,000.

That’s just a fraction of what SALT advocates in the House want, LaLota said. A group of lawmakers — largely from New York, New Jersey and California — most committed to expanding the tax break want a $62,000 deduction cap for individuals, or twice that for couples, the person said. They also demand those levels be indexed for inflation in future years, and that the higher limits are available for taxpayers starting in 2025.

House Speaker Mike Johnson told reporters Monday shortly before the draft legislation was released that no final SALT limit had been set yet. The House Ways and Means Committee is slated to debate the legislation Tuesday and party leaders could modify it at any point before a House vote.

“There were lots of numbers discussed,” Johnson said, following a meeting with lawmakers concerned about the tax break.

The draft legislation caps the SALT limit at $30,000 for both individuals and married couples, up from the current $10,000 limit imposed in the 2017 law. Prior to that law, there was no limit on the deduction and without new legislation the limit would automatically be removed when the 2017 law expires at the end of the year.

The SALT issue has been one of the most contentious for the House GOP to resolve as party leaders try to ram a multitrillion-dollar tax cut package through the House in May. The larger the cap adjustment is, the less money there will be for other tax cuts on the Republican agenda.

House Republicans are trying to keep revenue losses from their tax cut package down to a self-imposed limit of $4.5 trillion. They are also aiming for $2 trillion in spending cuts.

The ceiling must accommodate a nearly $4 trillion extension of the expiring 2017 Trump tax cuts as well as new cuts to taxes on tips and overtime. Republicans also want new tax breaks for seniors, car buyers and businesses building factories in the U.S.

Economic rationality has long been a foundational principle in financial decision-making.

According to classical theory, a rational consumer or investor evaluates all options based on costs, benefits and probabilities, ultimately selecting the one that maximizes utility. However, over the last few decades, this paradigm has been challenged by research revealing a far more complex and less predictable reality: the persistent presence of behavioral biases that distort our decisions, including in the accounting field. 

When analyzing how business owners, executives and even accounting professionals make decisions under risk, it becomes evident that emotional and cognitive factors play a decisive role. One frequently observed example is omission bias: the tendency to judge harmful outcomes resulting from inaction as less severe than those caused by action. In a tax context, such behavior may appear prudent, but it often comes at a significant cost. Companies continue operating under inefficient tax regimes, outdated systems or suboptimal structures to avoid the perceived risk of change, ignoring the fact that doing nothing is also a choice, often with its hidden costs. 

This phenomenon connects to other well-documented aspects of behavioral economics, such as the endowment effect, which causes individuals to overvalue what they already own, and loss aversion, which distorts judgment by assigning greater emotional weight to losses than to equivalent gains. Accounting — a discipline directly involved with resource allocation, tax compliance, corporate structure and strategic planning — is particularly vulnerable to these biases. 

Prospect theory, developed by Daniel Kahneman and Amos Tversky, provides valuable insights into why individuals tend to become more risk-seeking when facing losses. A business owner who sees their profits being eroded by a poorly optimized tax burden is likely to resist change, precisely when change is most needed. Instead of reassessing their tax strategy, they wait, hoping for a reversal that rarely comes without deliberate action. This irrational pursuit of “breaking even” often compounds the problem, as decisions based on hope cannot substitute for well-informed strategy. 

The challenge for modern accounting professionals lies in recognizing that barriers to efficiency often reside not just in data or regulations, but in how clients interpret and respond to information. It’s essential to understand the logic behind business behavior, identify decision-making patterns and develop approaches that inform and motivate action. Knowing what must be done is not always enough — decisions must be structured in a way that aligns with the psychology of the decisionmaker. 

The future of accounting will not be defined solely by technology, but by the profession’s ability to engage with human behavior. Predictive models, smart audits and tax advisory services gain real power when they incorporate an understanding of the cognitive biases influencing choices. Tomorrow’s accounting will be led by professionals who master the numbers and the decision-making dynamics that shape economic outcomes.

President Donald Trump’s campaign tax pledges — no taxes on tips and overtime pay, plus new tax breaks for car buyers and seniors — are the centerpiece of a multitrillion dollar package that will serve as Republicans’ signature legislative effort.

In a draft version of the tax bill released on Monday, House Republicans highlighted the president’s populist priorities in a package that would enact those cuts through 2028. The bill would also make the lower individual tax rates Trump signed in 2017 permanent.

The bill addressed a tax issue that has been dividing lawmakers since it was first restricted by Trump in 2017: the $10,000 cap on the state and local tax deduction. The plan raises the SALT limit to $30,000, but with limits for individuals earning more than $200,000 or couples making twice that. 

The proposal, notably, doesn’t include a tax hike on the wealthiest Americans, after weeks of debate among Republicans about whether to raise levies on millionaires. The bill would permanently extend the 37% top rate for individuals that was set in Trump’s 2017 tax law. That’s despite Trump telling House Speaker Mike Johnson as recently as last week that he wanted a 39.6% rate for individuals making more than $2.5 million.

“The president loves the bill. He met with Jason Smith on Friday and it’s a great first step,” top Trump economic adviser Kevin Hassett told reporters Monday, referring to the House Ways and Means Committee Chair who led the effort to craft the tax bill. 

The package — which Trump has dubbed his “one big, beautiful bill” — is the totality of his legislative agenda. The bill is officially scored as losing $3.7 trillion in revenue over 10 years, within the $4.5 trillion limit lawmakers set for themselves. 

The cost of the bill was constrained by phasing out many renewable energy subsidies and by the SALT limit itself. Without congressional action, SALT would be uncapped after this year, so putting a $30,000 limit on the write-off creates a $900 billion revenue stream to offset some of the cuts. Additionally, many of the new tax breaks — such as no taxes on tips — are only proposed to last for four years, further tamping down costs.

Narrow Republican margins in the House mean that the president needs nearly unanimous support from his party to pass the bill.

The plan will take a big step toward advancing through the House as soon as this week, with the House Ways and Means Committee scheduled to begin debate on it on Tuesday.

Johnson told reporters Monday that the House is on track to pass the legislation by Memorial Day. It would then go to the Senate where it could be subject to major revisions.

Among provisions up for debate: the amount to increase the nation’s borrowing authority. The House bill calls for a $4 trillion increase, smaller than the Senate’s preferred $5 trillion level. Lawmakers are hoping to push any additional votes on raising the debt ceiling until after the 2026 midterm elections. 

Promises made

The draft language includes several of the unorthodox proposals that were central to Trump’s campaign message: no taxes on tipped wages — an idea he said came from a waitress — and eliminating levies on overtime pay. The plan also calls making the interest on car loans deductible, similar to how mortgage interest can be written off. But the car buyers can only claim the break on American-made vehicles, underscoring Trump’s desire to boost U.S. manufacturing.

Trump had also campaigned on ending taxes on Social Security benefits, but that runs afoul of the budget rules Republicans are using to pass the bill. Instead, the bill provides a $4,000 bonus for seniors on top of the regular standard deduction.

One of the thorniest issues — the contentious standoff over increasing the SALT deduction — may still be up for debate. Some lawmakers representing high-tax areas want an even bigger tax break, as much as $124,000 for joint filers, a far cry from the $30,000 cap included in the legislation.

The package lays out new levies. It would impose a new tax on private foundations of up to 10% and a new tax on foreign remittance of 5%, subject to exemptions. Also on the hook for tax increases: wealthy private universities, which could see an increase in the levy on endowments from 1.4% to as high as 21% on investment income.

Multinational companies would get an extension of current lower rates on foreign profits, marking a win for corporate America.

Tax breaks benefiting the renewable energy sector are also set to be scaled back. Popular production and investment tax credits for clean electricity would be phased out by the end of 2031, and new requirements against using materials from certain foreign nations would be added. The $7,500 consumer tax credit for the purchase of an electric vehicle would be fully eliminated by the end of 2026. 

Monday’s draft bill came after the tax-writing committee released some initial provisions late Friday. Those included raising the maximum child tax credit to $2,500 from $2,000 and increasing the standard deduction, both retroactive to 2025 to put more money in voters’ pockets before the 2026 elections. 

The bill also raises the estate tax exemption to $15 million and increases the 20% deduction for closely held businesses to 23%.

While the bill would include roughly $1.5 trillion in spending cuts over the next decade, that wouldn’t come close to covering the roughly $4 trillion in tax cuts outlined in the plan, meaning it would likely add to deficits in the coming years.

Republicans have pointed to tariffs as a key source of revenue to help offset the deficit impact from the tax bill, and data out Monday showed customs duties jumped to a record $16 billion in April. The revenue won’t be officially scored as paying for the bill since the text doesn’t enact the emergency Trump tariffs into law.

Following Monday’s agreement between Beijing and Washington to deescalate the trade war, the Yale Budget Lab estimated all tariffs to date in 2025 would bring in roughly $2.3 trillion over the next decade if they remain in place, after accounting for the negative economic effects from higher levies.