{"id":40799,"date":"2026-02-03T19:47:11","date_gmt":"2026-02-03T19:47:11","guid":{"rendered":"https:\/\/financialrush.com\/?p=40799"},"modified":"2026-02-03T19:47:11","modified_gmt":"2026-02-03T19:47:11","slug":"how-trumps-higher-salt-deduction-limit-could-impact-your-taxes","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=40799","title":{"rendered":"How Trump’s higher SALT deduction limit could impact your taxes"},"content":{"rendered":"

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

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With tax season underway<\/a>, many filers are expecting bigger refunds<\/a> due to retroactive changes enacted in President Donald Trump<\/a>‘s “big beautiful bill<\/a>.” One expanded tax break<\/a> in particular could trigger a sizable windfall<\/a> for certain filers, experts say.\u00a0<\/p>\n

For 2025, the legislation raised the federal\u00a0deduction limit for state and local taxes<\/a>, known as SALT, to $40,000, up from $10,000. Filers must itemize tax breaks rather than claiming the standard deduction to benefit from the higher SALT limit. The benefit starts to phase out, or get smaller, once income exceeds $500,000.<\/p>\n

“A lot of what’s going to drive higher refunds [for 2025 returns] is the higher SALT cap,” Andrew Lautz, director of tax policy for the Bipartisan Policy Center, a nonprofit think tank, told reporters during a call last week.<\/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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Before 2018, the SALT deduction \u2014 which includes property taxes plus either state and local income or sales taxes, but not both \u2014 was unlimited. However, Trump’s 2017 legislation<\/a> capped the deduction at $10,000 through 2025.\u00a0<\/p>\n

Since the 2017 change, SALT deduction cap relief has been a key issue for certain lawmakers in high-tax states like New York, New Jersey and California. The 2017 law also doubled the standard deduction, which slashed the number of filers who itemize. <\/p>\n

During tax year 2022, nearly 90% of returns<\/a> used the standard deduction, based on the latest IRS data. The same year, about 15 million returns claimed the SALT deduction, which is fewer than 10% of filings.<\/p>\n

The latest SALT deduction limit change is expected to primarily benefit higher earners<\/a>, according to a May analysis of various proposals from the Tax Foundation. The SALT deduction limit will increase by 1% per year through 2029 and revert to $10,000 in 2030.<\/p>\n<\/div>\n

Who could benefit from the higher SALT deduction<\/h2>\n
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For 2025, Trump’s legislation also boosted the standard deduction<\/a> to $15,750 for single filers and $31,500 for married couples filing jointly.<\/p>\n

This means your combined itemized deductions, including SALT, limited charitable gifts and medical expenses and other tax breaks, must exceed these thresholds \u2014 or you won’t benefit. But the $40,000 SALT cap means more filers could itemize for 2025 returns, experts say. <\/p>\n

“This is a big one, especially for my clients in high income tax or property tax states,” said Tommy Lucas, a certified financial planner at Moisand Fitzgerald Tamayo in Orlando, Florida. His firm is ranked No. 69 on CNBC’s Financial Advisor 100<\/a> list for 2025.\u00a0<\/p>\n<\/div>\n

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However, the higher SALT deduction benefit could vary significantly by location, based on property and income taxes.\u00a0<\/p>\n

In 2022, the average SALT deduction was near $10,000 in states such as Connecticut, New York, New Jersey, California and Massachusetts, according to a Bipartisan Policy Center analysis<\/a> from May. Those figures suggest “that a large portion of taxpayers claiming the deduction bumped up against the $10,000 cap,” researchers wrote.<\/p>\n

Meanwhile, the states and district with the highest share of SALT claimants were Washington, D.C., Maryland, California, Utah and Virginia, the analysis found.<\/p>\n<\/div>\n<\/div>\n\n
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