Senate Republicans indicated on Wednesday they are prepared to reduce the size of a key tax deduction in President Trump’s “big, beautiful bill” that was backed by moderates in the House, setting up a battle within the GOP over the divisive issue.

The fight had long been expected, with senators saying they thought the state and local tax (SALT) deduction cap in the House-passed bill was too large and too expensive, but the hardening of the plan in the upper chamber threatens to delay progress on the bill and raises further questions about meeting the GOP’s self-imposed July 4 deadline.

“There’s a gap between where we are and where the House is. … [It’s] likely going to be a lower number,” said Sen. Steve Daines (R-Mont.), a top adviser to Senate Majority Leader John Thune (R-S.D.), adding that the Senate GOP has not yet zeroed in on what that number will be.

Senate Republicans emerged from a conference meeting Wednesday where key committees laid out their portions of the bill and lawmakers discussed numerous changes on the table. Several contentious issues remained unresolved, with only two legislative weeks to go until the July 4 recess.

But multiple senators told The Hill that the chamber appears ready to chop down the $40,000 SALT cap, which was painstakingly negotiated between Speaker Mike Johnson (R-La.) and House GOP moderates from New York, New Jersey and California who have warned not to touch it.

Senate Finance Committee Chairman Mike Crapo (R-Idaho), one of the members who led the meeting, was insistent that the cap would fall below $40,000, one Senate Republican said.

It’s unclear exactly what number Republicans in the upper chamber are eyeing, but Bloomberg News reported it was $30,000.

“There was never a number specifically discussed other than the........

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