The SALT Cap Surge: A $40,000 Window High-Income Taxpayers Can’t Afford to Miss
Why the SALT deduction matters
The State and Local Tax (SALT) deduction lets itemizers subtract state income, sales, and property taxes they pay from federal taxable income. For affluent households in high-tax states—or anyone with multiple homes or significant state pass-through income—SALT often ranks among the largest deductions on Schedule A.
Since 2018 the Tax Cuts & Jobs Act (TCJA) has pinched this benefit by capping the write-off at $10,000 per return. Many high-earning clients have watched thousands in state tax payments go unused.
OBBBA’s game-changing (but temporary) boost
Enter the One Big Beautiful Bill Act (OBBBA): for 2025-2029 the SALT cap quadruples to $40,000, with a 1 % inflation bump each year after 2025 (e.g., $40,400 in 2026). Come 2030, however, the ceiling snaps back to $10k.
Phase-down alert: once adjusted gross income (AGI) tops $500,000, OBBBA begins shaving your allowed SALT deduction, though never below the $10 k floor.
Who stands to gain most?
High-income professionals & dual-income couples in states such as NY, NJ, CA, CT, IL, VA or DC that levy both steep income and property taxes.
Owners of pass-through entities (S-corps, partnerships, LLCs) who pay large state composite or individual income taxes.
Multistate filers juggling tax bills across several jurisdictions.
Actionable planning moves (start NOW)
Pitfalls & misconceptions
“I make $1 million; I’ll just deduct $40k.” Not exactly—deduction begins to phase down above $500k AGI.
“The cap is permanent now.” It’s not—the clock runs out after 2029, reverting to $10k in 2030.
“Extra SALT means automatic refund.” Only if your combined itemized deductions beat the standard deduction and you’re outside AMT—run the math first.
Timing is everything
The five-year window opens January 1, 2025. Smart taxpayers will have a plan before their 2025 property-tax bills arrive. The earlier you map out payments, charitable bunching, and PTET coordination, the more of that $40k ceiling you can actually use.
Ready to seize your $40k opportunity?
Our team at The RVA Accountant, PLLC specializes in high-net-worth and multi-state planning. Schedule your free initial consultation today and let’s design a SALT strategy tailored to your 2025-2029 goals.