State and Local Tax (SALT) Deduction Update for 2025 through 2029

​​The One Big Beautiful Bill Act (OBBBA) introduces a significant expansion of the SALT deduction for taxpayers in high tax states. This provision increases itemizing potential, impacts year end payment timing, and creates new planning opportunities for homeowners, investors, and small business owners who previously received limited benefit from the SALT cap.

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This page outlines the expanded cap, phaseouts, and technical considerations relevant for long term planning under OBBBA.

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Expanded SALT Deduction Cap Under OBBBA

​Beginning in 2025, OBBBA raises the SALT deduction cap from $10,000 to $40,000. The Married Filing Separately cap is $20,000.

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The increased SALT cap applies from 2025 through 2029. The cap increases by 1% each year during this period and is scheduled to revert to the $10,000 limit in 2030 unless Congress extends the provision.

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The expanded deduction is especially relevant for taxpayers whose itemized deductions were previously limited or whose state and property tax obligations significantly exceed the historical cap.

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Phaseout for Higher Income Taxpayers

​The enhanced SALT cap is subject to a phaseout for higher income households. The phaseout begins when Modified Adjusted Gross Income (MAGI) exceeds $500,000 and gradually reduces the benefit until MAGI approaches $600,000.

 

Near this range, the allowable SALT deduction approaches the historical $10,000 floor.

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For households with elevated income variability or multiyear planning considerations, managing MAGI becomes a central component of capturing the full benefit of the expanded SALT deduction.

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Taxpayers Most Likely to Benefit

​The expanded SALT deduction is particularly impactful for:

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• Homeowners in high property tax or high-income tax states.

• Taxpayers whose total itemized deductions now exceed the standard deduction threshold.

• Pass Through Entity Tax (PTET) election owners whose business structure already leverages SALT workarounds.

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These groups may experience meaningful increases in deductible SALT payments relative to prior years.

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Planning Considerations Under OBBBA

​Several technical considerations influence the timing and value of SALT deductions under the expanded rules:

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Property Tax Timing

The timing of property tax payments may influence the deduction year. Prepayments or delayed payments should be reviewed in relation to the expanded cap and MAGI expectations.

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Estimated State Tax Payments
Year end estimated payments may be adjusted to maximize utilization of the higher cap when itemizing exceeds the standard deduction.

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Alternative Minimum Tax (AMT)

SALT remains nondeductible for AMT purposes. Taxpayers subject to AMT may not benefit from the expanded cap and should review interactions between AMT exposure and itemizing.

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State Conformity

Not all states conform to federal SALT provisions. State level rules should be reviewed to determine whether the expanded federal cap affects state tax outcomes.

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Request a SALT Deduction Planning Review

​A detailed review of itemized deductions, MAGI thresholds, payment timing, and state conformity rules supports accurate planning under OBBBA’s expanded SALT deduction.

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A review includes:

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• Analysis of eligibility for the expanded SALT cap.

• Assessment of MAGI positioning within $500,000 to $600,000 phaseout range.

• Evaluation of property tax and estimated state tax timing.

• AMT exposure analysis under current and projected income.

• Review of PTET interactions and entity level SALT optimization.

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Submit the form below to initiate a technical assessment. This review supports proactive planning for taxpayers seeking to leverage the expanded SALT deduction between 2025 and 2029.​

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​Optimize SALT Deductions Under the OBBBA Expansion

​​​The expanded $40,000 SALT cap creates new planning opportunities for households with significant state and property tax liabilities. A structured review identifies eligibility, phaseout exposure, itemization potential, and timing strategies that refine state and local tax outcomes.

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This assessment is designed for homeowners, pass-through business owners, and taxpayers in high tax jurisdictions.

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Provide income, state tax, and property tax details to evaluate eligibility for the expanded forty-thousand-dollar ($40,000) cap, assess phaseout exposure, and identify year end planning opportunities under OBBBA.

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A structured review now supports more predictable outcomes during the 2025 through 2029 window.​