Is salam in the bathroom permitted or Haram?

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

Al-Salaam is one of the Beautiful Names of Allah, so it should not be uttered except in a pure place as Allah Says (what means): {…and whoever honors the sacred ordinances of Allah — it is best for him in the sight of his Lord.)} [Quran 22:30]
Therefore, a Muslim should honor the Names of Allah as it is not suitable to mention them in the bathroom and the like. This is the viewpoint of the scholars so if a person greets you with Salaam while you are in the bathroom, then do not reply to him (with Salaam).

Allah knows best.