{"id":35541,"date":"2025-09-05T12:20:38","date_gmt":"2025-09-05T12:20:38","guid":{"rendered":"https:\/\/financialrush.com\/?p=35541"},"modified":"2025-09-05T12:20:38","modified_gmt":"2025-09-05T12:20:38","slug":"how-to-maximize-the-40000-limit-for-2025","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=35541","title":{"rendered":"How to maximize the $40,000 limit for 2025"},"content":{"rendered":"

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Milan Markovic | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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President Donald Trump<\/a>‘s “big beautiful bill” raised the limit<\/a> on the federal deduction for state and local taxes, known as SALT, and there are ways to maximize it for 2025, experts say.<\/p>\n

If you itemize tax breaks<\/a>, you can claim the SALT deduction<\/a>, which includes state and local income taxes and property taxes. Trump’s 2017 legislation<\/a> capped SALT at $10,000, which was a pain point for certain residents of high-tax states.\u00a0<\/p>\n

However, there’s now a $40,000 SALT deduction limit for 2025. The cap increases by 1% yearly through 2029, and reverts to $10,000 in 2030.<\/p>\n

Those affected can “capitalize on that extra $30,000 SALT deduction” for 2025, according to certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.<\/p>\n<\/div>\n

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More from Financial Advisor Playbook:<\/h2>\n
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Here’s a look at other stories affecting the financial advisor business.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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If you’re itemizing tax breaks and impacted by the higher SALT deduction for 2025, here are some key things to know.<\/p>\n<\/div>\n

Watch for the ‘SALT torpedo’<\/h2>\n
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Higher earners need to know the SALT deduction phaseouts, or benefit reductions, once modified adjusted gross income, or MAGI, exceeds certain thresholds, experts say.<\/p>\n

For 2025, the $40,000 SALT deduction limit starts to decrease when MAGI passes $500,000, and the tax break drops to $10,000 once MAGI hits $600,000.<\/p>\n<\/div>\n

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However, if your earnings fall between $500,000 and $600,000, the phaseout creates what some experts are calling a “SALT torpedo,”<\/a> or artificially high federal tax rate of 45.5%.\u00a0<\/p>\n

“When people start actually crunching numbers, they might be in for some surprises,” Andy Whitehair, a CPA and a director with Baker Tilly’s Washington tax council practice, previously told CNBC<\/a>.<\/p>\n<\/div>\n

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When people start actually crunching numbers, they might be in for some surprises.<\/p>\n

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Andy Whitehair<\/p>\n

CPA and director with Baker Tilly’s Washington tax council practice<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/blockquote>\n

‘Double pay’ property taxes<\/h2>\n
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Before 2018, the SALT deduction was unlimited. But the so-called alternative minimum tax<\/a> reduced the benefit for some higher earners.\u00a0<\/p>\n

Trump enacted the $10,000 SALT cap late in December 2017, which was effective in 2018. The legislation prompted some filers to prepay 2018 property taxes by year-end 2017 to use more of the unlimited SALT deduction.<\/p>\n

For certain taxpayers, a similar “lumping” strategy could make sense for 2025, according to CFP Abigail Rose, director of tax planning for Keeler & Nadler Family Wealth in Dublin, Ohio.<\/p>\n

“Maybe we can double pay property taxes in one year,” which could bring you closer to claiming the full $40,000 deduction, said Rose, who is also a CPA.<\/p>\n<\/div>\n

Prepay fourth-quarter state income taxes<\/h2>\n
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If you owe quarterly estimated taxes<\/a> for self-employment, small business income or investment earnings, you could also consider making your fourth-quarter state income tax payment by Dec. 31, Guarino said.<\/p>\n

For 2025, the federal fourth-quarter estimated tax deadline is Jan. 15, 2026, and many states have similar due dates, Guarino said.<\/p>\n

When combining property and state income tax, reaching “the $40,000 level isn’t much of a stretch” for the SALT deduction, he said.<\/p>\n<\/div>\n<\/div>\n\n
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