Moderate House Republicans from high-tax blue states are seething at the Senate’s proposal to keep the state and local tax (SALT) deduction cap at $10,000, setting the stage for a showdown over one of the thorniest aspects of the GOP’s “big, beautiful bill.”

Republicans on the Senate Finance Committee set off a frenzy Monday afternoon when they released text for their part of the GOP megabill, which lowered the SALT deduction cap from $40,000 the product of tenuous negotiations between House moderates and Speaker Mike Johnson (R-La.) to $10,000, matching the cap in current law.

Senate Republicans have said that the number in the text is merely a placeholder to continue negotiations across the Capitol. But House Republicans in the SALT Caucus are warning in no uncertain terms that they will not accept anything lower than the $40,000 deduction cap they landed last month.

“We have been crystal clear that the SALT deal we negotiated in good faith with the Speaker and the White House must remain in the final bill,” Reps. Andrew Garbarino (R-N.Y.) and Young Kim (R-Calif.), co-chairs of the SALT Caucus, wrote in a statement. “Instead of undermining the deal already in place and putting the entire bill at risk, the Senate should work with us to keep our promise of historic tax relief and deliver on our Republican agenda.”

Rep. Mike Lawler (R-N.Y.), another key member of the group, was more succinct, writing on the social platform X that the proposal was “DEAD ON ARRIVAL” and warning in a statement that a $40,000 deduction cap “is the deal and I will not accept a penny less.”

“If the Senate reduces the SALT number, I will vote NO and the bill will fail in the House,” he added.

Senate Majority Leader John Thune (R-S.D.) told reporters Monday afternoon that the $10,000 deduction cap is a “marker” for talks with House Republicans, and that they will find a number in the middle that satisfies both camps.

“We understand that it’s a negotiation,” Thune said. “Obviously there had to be some marker in the bill to start with. But we’re prepared to have discussions with our colleagues here in the Senate and figure out a landing spot.”

If a deduction cap below $40,000 remains in the bill, and Senate Republicans approve it, the legislation is unlikely to pass the House, where it must go for final approval before landing on President Trump’s desk. House Republicans can only afford to lose three votes and still pass the bill assuming full attendance and all Democrats vote “no” and far more have come out against the new SALT provision.

“The Senate doesn’t have the votes for $10k SALT in the House,” Rep. Nick LaLota (R-N.Y.), a vocal member of the SALT Caucus, wrote on X, with a photo of Daveed Diggs portraying Thomas Jefferson in “Hamilton” and a caption reading “you don’t have the votes; you don’t have the votes.”

“And if they’re not sold on the House’s $40k compromise, wait until they crash the [One Big Beautiful Bill Act] and [Tax Cuts and Jobs Act] expires—when SALT goes back to unlimited at year-end,” he added. “They won’t like that one bit.”

Rep. Elise Stefanik (R-N.Y.) wrote on X that “Everyone knows this 10K number will have to go up. And it will. NY Republicans will fight and deliver real tax relief for our overly taxed constituents (unlike NY Democrats who have failed the people of NY over and over crushing them with high taxes).”

SALT for months has been one of the most contentious parts of the GOP’s bill full of Trump’s legislative priorities, with moderate House Republicans from high-tax blue states including representatives from New York, New Jersey and California, many of whom helped secure the conference’s majority pushing for a higher deduction cap, and deficit hawks pressing to keep it low.

After months of negotiations, members of the House’s SALT Caucus landed a deal with leadership for a $40,000 deduction cap for individuals making $500,000 or less quadruple the current $10,000 deduction cap. They warned their colleagues in the upper chamber not to tamper with the number.

Johnson, who negotiated the $40,000 deduction cap with members of the SALT Caucus, said he urged the Senate on a number of occasions to be “cautious” in how it changed their bill, especially the SALT provision.

“I’ve been very consistent from the very beginning: I’ve encouraged them to be very cautious in changing terms of the bill, especially on SALT because it took us, as I’ve said over and over and over, it took us over a year to negotiate those terms, and it’s very delicate,” he said last week.

But once Senate Republicans got their hands on the package, they quickly warned that they would lower the number, staking opposition to the higher deduction cap that they view as an unfair subsidy for blue states. With zero Senate Republicans hailing from blue states that benefit from a higher SALT deduction cap, the issue has no champion in the upper chamber.

It remains unclear where SALT conversations will go from here. With the party’s July 4 deadline quickly approaching, Senate Republicans can still change parts of their package, whether it be through an amendment or on the floor. Even so, SALT Caucus Republicans in the House are warning that they are sticking by the $40,000 cap.

“The $40,000 SALT deduction was carefully negotiated along with other tax provisions by the House of Representatives and we all had to give a little to obtain the votes to pass the Big Beautiful Bill,” Rep. Nicole Malliotakis (R-N.Y.) wrote on X. “For the Senate to leave the SALT deduction capped at $10,000 is not only insulting but a slap in the face to the Republican districts that delivered our majority and trifecta.”

“We understand that it’s a negotiation. Obviously there had to be some marker in the bill to start with. But we’re prepared to have discussions with our colleagues here in the Senate and figure out a landing spot.”

Al Weaver contributed.