Overview
Beginning in 2025, the One Big Beautiful Bill Act significantly increases the cap on the State and Local Tax (SALT) deduction: from $10,000 to $40,000, with annual inflation adjustments through 2029.
This change provides long-awaited relief for taxpayers in high-tax states, who were previously limited under the old $10,000 cap.
Who Benefits from the Expansion
The increased deduction is expected to help:
Homeowners who pay high property taxes
Taxpayers in states with above-average income or sales taxes
Families who itemize deductions rather than take the standard deduction
However, the benefit phases out for higher-income taxpayers with Modified Adjusted Gross Income (MAGI) above $500,000.
What This Means for You
With the higher cap, itemizing deductions may once again make sense for many taxpayers who previously chose the standard deduction.
If you live in a high-tax state, this adjustment could translate into thousands of dollars in potential tax savings depending on your income level, home ownership status, and other deductible expenses.
Plan Ahead for 2025
Tax planning will be key to maximizing this new opportunity. Consider reviewing your 2024 and 2025 income, property tax, and state tax obligations early to see how the expanded cap might impact your filing strategy.
If you’d like help running the numbers or determining whether itemizing is the right move for you, please call us at (401) 921-2000 or contact us here.