Yes, the $10,000 cap on the SALT deduction remains in effect for the 2025 tax year. This cap was introduced by the Tax Cuts and Jobs Act (TCJA) in 2017 and is set to expire at the end of 2025. However, recent legislative developments have proposed changes to this cap.:contentReference[oaicite:6]{index=6}
📜 SALT Cap History and Recent Changes
The TCJA imposed a $10,000 cap on the SALT deduction, limiting the amount taxpayers could deduct for state and local taxes on their federal returns. This cap has been a point of contention, particularly for residents in high-tax states.:contentReference[oaicite:11]{index=11}
In July 2025, President Trump signed the “One Big Beautiful Bill” into law, which includes provisions to increase the SALT deduction cap. Under this new legislation, the SALT cap is temporarily raised to $40,000 for taxpayers with an Adjusted Gross Income (AGI) of $500,000 or less. For those with AGI above $500,000, the cap phases down by 30% for every dollar over the $500,000 threshold, reaching the original $10,000 cap at an AGI of $600,000. This adjustment is set to be in effect for the 2025 through 2029 tax years. Starting in 2030, the cap will revert to $10,000, with no further adjustments for inflation. :contentReference[oaicite:22]{index=22}:contentReference[oaicite:23]{index=23}
💸 Impact on High-Income Earners
The increase in the SALT deduction cap is particularly beneficial for high-income earners residing in high-tax states. For example, in states like California and New Jersey, where state and local taxes can be substantial, the higher cap allows taxpayers to deduct a larger portion of these taxes, potentially reducing their federal tax liability. However, it’s important to note that the phase-down mechanism means that taxpayers with an AGI above $500,000 will see a gradual reduction in the deductible amount, with the full $10,000 cap reinstated at an AGI of $600,000. :contentReference[oaicite:30]{index=30}:contentReference[oaicite:31]{index=31}
📊 Key Takeaways
- The $10,000 SALT deduction cap remains in effect for the 2025 tax year.
- The “One Big Beautiful Bill” raises the SALT cap to $40,000 for taxpayers with an AGI of $500,000 or less, effective for tax years 2025 through 2029.
- For taxpayers with an AGI above $500,000, the SALT cap phases down by 30% for every dollar over the threshold, reaching $10,000 at an AGI of $600,000.
- Starting in 2030, the SALT cap will revert to $10,000, with no further adjustments for inflation.
These changes aim to provide temporary relief to taxpayers in high-tax states. However, the eventual reversion to the $10,000 cap may continue to impact high-income earners in these states.:contentReference[oaicite:36]{index=36}
For more detailed information on how these changes may affect your tax situation, consider consulting a tax professional.:contentReference[oaicite:39]{index=39}
