Trump tasks blue state Republicans with 'homework' as GOP plots massive conservative policy overhaul

President-elect Donald Trump is giving Republicans his blessing to negotiate on a key tax that could prove critical to the GOP’s negotiations for a massive conservative policy overhaul next year.

Trump met with several different groups of House Republicans at Mar-a-Lago over the weekend, including blue state GOP lawmakers who make up the House SALT Caucus – a group opposed to the current $10,000 cap on state and local tax (SALT) deductions that primarily affect urban and suburban residents in areas with high income and property taxes, such as New York, New Jersey, and California.

"I think it was productive and successful," Rep. Nicole Malliotakis, R-N.Y., said of the meeting. "The president supports our efforts to increase the SALT deduction. He understands that mayors and governors in blue states are crushing taxpayers and wants to provide relief from the federal level."

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But Trump also signaled he was aware of the opposition from others in the House GOP conference, particularly rural district Republicans, who have viewed SALT deductions as tax breaks for the wealthy. Before the cap was imposed in 2017, there was no limit to how much state income and local property taxes people could deduct from their income when filing their federal returns.

"He gave us a little homework to work on, a number that could provide our middle class constituents with relief from the high taxes imposed by our governor and mayor, and at the same time, you know, something that can build consensus and get to [a 218-vote majority]," Malliotakis said.

 "I think we pretty much know that it's not going to be a complete lifting of the SALT cap. There’s not an appetite within Congress or even among American taxpayers to lower taxes for the ultra-wealthy.

"Our efforts are really targeted to middle-class families, and that's what we're focused on in trying to achieve the right balance."

The current SALT deduction cap has been opposed by New York and California lawmakers for much of its existence, since being levied in Trump’s Tax Cuts and Jobs Act (TCJA).

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Trump suggested he would change course during his second administration as early as September last year, when he posted on Truth Social that he would "get SALT back, lower your taxes, and so much more."

The discussions are part of Republicans’ wider talks about passing a massive fiscal and conservative policy overhaul via a process known as "reconciliation."

By lowering the Senate’s threshold for passage to a simple majority instead of two-thirds, the process allows the party in control of both houses of Congress and the White House to pass certain legislation provided it deals with budgetary and other fiscal matters.

Some pro-SALT deduction Republicans, like Rep. Mike Lawler, R-N.Y., had signaled they could withhold support from the final bill if the cap was not increased.

"The only red line I have is that if there is a tax bill that does not lift the cap on SALT, I would not support that," Lawler told Fox News’ Sunday Morning Futures.

Lawler also said Trump agreed that SALT deduction caps needed to be raised.

House Republicans have virtually no room for error with a razor-thin majority from Trump’s inauguration until likely sometime in April.

Meanwhile, Trump also told New York Republicans that he would help them fight their state’s controversial congestion pricing rule that levies an added cost to drive in parts of Manhattan.

"He understands how unfair this is and how it would impact the city's economy and the people we represent and so we're currently working with him on legal options to reverse the rubber stamp of the Biden administration," Malliotakis said. "If there's a legal option, if there's a legal option for him to halt congestion pricing, he will."

"You have, you know, cops, police, firefighters, nurses, the restaurant workers that have to go in at odd hours, and they drive because they don't feel that the transit system is clean or safe."

Congestion pricing took effect in New York City earlier this month.

Fox News Digital reached out to the Trump transition team for comment on this weekend’s meeting.