🧂 SALT Cap Just Got Spicier: What You Need to Know About the $40K Deduction Bump

If you thought “SALT cap” was just a Whole30 recipe restriction, surprise — it’s back in the tax spotlight, and it just got a glow-up.

Thanks to the latest rewrite of the tax rules, the State and Local Tax (SALT) deduction cap is going from its long-held $10,000 max to a slightly more luxe $40,000… but only for certain filers.

Let’s break it down, Taxish-style.

🧾 First, a refresher: What even is the SALT deduction?

The SALT deduction (State And Local Tax) lets you write off what you paid in state local income, sales, and property taxes… a real lifeline for folks in high-tax states like New York, California, and New Jersey.

Since 2018, it’s been capped at $10,000. Cue the collective groans from homeowners and high earners in blue states.

💸 What’s changing?

Starting in 2025, individuals and married couples filing jointly can deduct up to:

• $40,000 in SALT… 👉 But only if their adjusted gross income is under $500,000

If you're above $500K, the cap slides down fast … and once you hit $600K, you're back to that salty old $10K limit. Sorry, yacht dads.

If you’re married and file separately, the $40k is split in half and you’re limited to a $20,000 SALT deduction. 

🛠️ Small business owners: you’ve got options

 If you're a small business owner, now is the time to talk tax strategy. That phase-out between $500K and $600K? It’s tight — but it’s also an opportunity. You might be able to time your income and expenses to keep your adjusted gross income under the line.

Accelerating deductions by investing in new equipment, taking advantage of bonus depreciation or Section 179 can help lower your taxable income this year. Likewise, if possible, consider deferring revenue to future tax years to stay within the sweet spot. These are the chess moves ♟️that need to be made before year-end — and with intention.

Also worth noting: there were no changes to the Pass-Through Entity Tax (PTET) workaround in this legislation. So if your state offers a workaround that lets your business pay state income tax at the entity level — and deduct it — it’s still on the table. This remains one of the most powerful tools for business owners facing the SALT deduction limit.

⚖️ SALT Cap Pros and Cons (Because this is Taxish, not a TED Talk)

✅ Pros:

• 💰 Some dual-income couples in high-tax states just got a $30K deduction bump. Talkin’ to you California, New York, New Jersey, and Oregon...

• 🏠 Encourages homeownership in places where property tax bills are high

• 👩‍❤️‍👨 Targets middle/upper-middle earners (finally, something not just for billionaires!)

🚫 Cons:

• ⚖️This isn’t forever…  just from 2025 through 2029

• 🧮 The phase-out math is aggressively fine print — a $1,000 income difference could cost you thousands

• 🌊 Doesn’t help married folks above $600K — you’re still in the $10K penalty box

🧠 Bottom line:

If you’re a married couple under $500K AGI and living in a high-tax state, this is your moment.If you're above $600K? The new SALT cap doesn’t help you. I know…bummer. 

More folks will be back to itemizing instead of taking the standard deduction, which means those donations and mortgage interest payments might actually pack a tax punch again. If you're in that boat, it's time to make every deduction count.

Need help figuring out if you qualify or how to keep your AGI below the magic line with tax planning? That’s literally our job.

Taxish — real tax help that doesn’t suck.™