SALT Shaker Alert: Bigger Deductions Ahead

Some good, salty news for taxpayers! The One Big Beautiful Bill Act (OBBBA) spices things up for individual taxpayers by increasing the State and Local Tax (SALT) deduction. Starting in the 2025 tax year, Married Filing Jointly couples will get up to a $40,000 ($20,000 for single filers) deduction on their federal income tax returns. This increase is in effect until 2029.

That’s a big jump from the current $10,000 cap that’s been in place since 2018. This new increased deduction makes itemizing more accessible for taxpayers than in previous tax years and may allow more taxpayers to itemize deductions rather than taking the standard deduction.

The SALT deduction applies to:
State and local real property taxes;
State and local personal property taxes;
The higher of state and local income taxes or sales tax.
The SALT deduction is subject to income limitations as follows:

 FILING STATUS MAGI Limit for full deduction:
Single Up to $250,000
Married Filing Jointly Up to $500,000

 The available SALT deduction is reduced by 30% of the amount exceeding the modified adjusted gross income (MAGI) threshold.

 EXAMPLE 1: A couple with $550,000 of MAGI in 2025 would exceed the $500,000 threshold by $50,000. Applying the 30% phaseout, $15,000 of the deduction would be disallowed. Starting from the $40,000 cap, the taxpayers would still be eligible to deduct $25,000 in SALT.

EXAMPLE 2: A couple with $750,000 of MAGI would see $250,000 of income over the threshold. That would result in a $75,000 reduction in their allowable deduction. Since this exceeds the $40,000 cap, the deduction would phase down to the minimum guaranteed amount of $10,000.

And here’s the kicker: with more SALT on the table, taxpayers who’ve been living on the “standard diet” might finally get to enjoy the full menu of itemized deductions—medical, interest, charity, and more.

This change could mean significant savings for homeowners in high-tax states like NY, NJ, and CA. It’s a good time to revisit your withholding or estimated payments before tax season sneaks up.

Call a Buckno Lisicky & Company accountant to see how this change impacts you.
Enjoy the extra salt without the high blood pressure!