New SALT Deduction Limits (OBBBA)
- POOJA SRIVASTAVA
- 7 days ago
- 2 min read
The One Big, Beautiful Bill Act (OBBBA) introduces important updates to the State and Local Tax (SALT) deduction limits, impacting taxpayers from 2025 through 2029, before reverting to previous limits in 2030.
Updated SALT rules.
The SALT deduction cap, previously permanently set at $10,000 under the Tax Cuts and Jobs Act (TCJA), will temporarily increase to $40,000 for tax years 2025 to 2029.
This increased cap will phase down gradually based on your Modified Adjusted Gross Income (MAGI), but will not fall below $10,000.
The cap for married taxpayers filing separately (MFS) will be half of the general limit.
Starting in 2030, the SALT deduction cap will revert to $10,000 ($5,000 for MFS).
Tax Year | SALT Cap (Married Filing Jointly) | Phase-down Threshold (MFJ) | Phase-down Threshold (MFS) |
|---|---|---|---|
2025 | $40,000 | $500,000 - $600,000 | $250,000 - $300,000 |
2026 | $40,400 | $505,000 - $606,333 | $252,000 - $303,167 |
2027 | $40,804 | $510,050 - $612,730 | $255,025 - $306,365 |
2028 | $41,212 | $515,151 - $620,564 | $257,576 - $310,282 |
2029 | $41,624 | $520,302 - $625,715 | $260,151 - $312,858 |
2030+ | $10,000 | N/A | N/A |
Here is an example if you make over the MAGI threshold, the income levels will work out comparison to last year 2024:
Scenario | 2024 — $500K MAGI | 2025 — $500K MAGI | 2024 — $1M MAGI | 2025 — $1M MAGI |
Filing Status | Married Filing Jointly (MFJ) | Married Filing Jointly (MFJ) | Married Filing Jointly (MFJ) | Married Filing Jointly (MFJ) |
SALT Taxes Paid | $60,000 | $60,000 | $60,000 | $60,000 |
SALT Deduction Cap | $10,000 | $40,000 | $10,000 | $40,000 |
Phase-down Threshold | No phase-down (cap fixed at $10,000) | $500,000 - $600,000 | No phase-down (cap fixed at $10,000) | $500,000 - $600,000 |
MAGI | $500,000 | $500,000 | $1,000,000 | $1,000,000 |
Phase-down Amount | N/A | 30% × ($500,000 - $500,000) = $0 | N/A | 30% × ($1,000,000 - $500,000) = $150,000 |
SALT Deduction Before Minimum | $10,000 | $40,000 | $10,000 | $40,000 - $150,000 = negative (floored at $10,000) |
Minimum SALT Deduction Allowed | $10,000 | $10,000 | $10,000 | $10,000 |
Final SALT Deduction Allowed | $10,000 | $40,000 | $10,000 | $10,000 |
For more information please reach out to contact@2cherrytax.com
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