The new law raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 starting in 2025, with subsequent 1% annual increases through 2029. This allows federal income tax filers to deduct state and local income or sales taxes and property taxes if they itemize deductions on their federal returns. Although the change may benefit some itemizers, many filers are expected to stick with the increased standard deduction instead, which further complicates the decision to itemize for tax benefits.
For the next five years, there will be a much more generous state and local tax deduction available to federal income tax filers, thanks to the recently enacted mega tax-and-spending-cuts law.
The new law lifts what had been a $10,000 cap to $40,000 for tax year 2025 and then adjusts it upward by 1% a year for 2026, 2027, 2028, and 2029.
The SALT deduction enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes.
Prior to 2017, there was no cap on the SALT deduction, but the 2017 Tax Cuts and Jobs Act capped it at $10,000 for everyone.
Collection
[
|
...
]