SALT Cap Update

Live in NY, NJ, CA, IL, or CT?
You Just Got a Cut.

The State and Local Tax (SALT) cap quadrupled from $10,000 to $40,000. For high-state residents, that's up to $11,100 in additional federal savings.

$10,000 → $40,000

Effective 2025-2029. Increases 1% annually. Reverts to $10K in 2030.

By State

Who Benefits Most

State	Avg SALT Claimed ($200K+ filers)	Was Capped At	Now Deductible
New York	$103,575	$10,000	Up to $40,000
Connecticut	$79,344	$10,000	Up to $40,000
California	$78,246	$10,000	Up to $40,000
New Jersey	$60,000+ est.	$10,000	Up to $40,000
Illinois	$45,000+ est.	$10,000	Up to $40,000
Massachusetts	$40,000+ est.	$10,000	Up to $40,000

Source: Tax Foundation SALT deduction data, Venable LLP

Important Details

The Fine Print

Phase-out starts at $505,000 MAGI ($250K MFS). Reduced by 30 cents per dollar over the threshold.
Floor of $10,000 even at the highest incomes.
MFS filers: $20,000 cap.
Temporary: Reverts to $10,000 in 2030. Plan accordingly.
Pass-Through Entity Tax (PTET) workarounds still relevant for business owners.
37% bracket: Itemized deductions capped at 35% value starting 2026.

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Common Questions

Frequently Asked Questions

What is the SALT cap change?

The State and Local Tax (SALT) deduction cap was raised from $10,000 to $40,000 for joint filers. This means you can now deduct up to $40,000 in state and local taxes on your federal return, effective 2025 through 2029.

Do I qualify for the higher SALT deduction?

If you pay state income taxes, local income taxes, or property taxes that exceed $10,000 combined, you likely benefit. The biggest impact is for residents of high-tax states like NY, NJ, CA, CT, IL, and MA. Phase-out begins at $505K MAGI.

Is the $40K SALT cap permanent?

No. The $40,000 cap is effective for tax years 2025 through 2029, with a 1% annual increase. It reverts to $10,000 in 2030 unless extended by new legislation. Planning ahead is critical to maximize the benefit window.

How do I claim the higher deduction?

You must itemize deductions on your federal return (Schedule A). If your total itemized deductions exceed the standard deduction, the higher SALT cap increases your federal tax savings automatically. A strategist can model the impact for your specific situation.

Does this affect my state taxes?

The SALT cap only applies to your federal return. Your state tax liability remains unchanged. However, the increased federal deduction reduces your overall tax burden. Business owners using Pass-Through Entity Tax (PTET) workarounds should review their strategy.

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This page is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation. Savings estimates based on publicly available IRS and Tax Foundation data.