While the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, had a number of income tax provisions in it, I am going to focus on one that I believe will help a number of homeowners this year and for the immediate future.
Under the Tax Cuts and Jobs Act (TCJA) of December 2017, the State and Local Income Tax Deduction (also known as SALT deduction) was limited to $10,000 beginning in 2018. With the passage of the OBBBA, beginning in 2025 (this tax year) through 2029, the SALT deduction increases from $10,000 to $40,000 ($20,000 for married filing separately filers). The law provides an additional 1% increase annually, so in 2026 the maximum deduction will increase from $40,000 to $40,400.
For a number of CJM clients who itemize their deductions on their returns, the increase in the SALT limit may help reduce some of their income tax burden beginning this year.
The new $40,000 limit begins to phase out for high earners with income over $500,000. This is completely phased out for income above $600,000, at which point the deduction will revert to the prior $10,000).
Please remember that the SALT deduction remains available for property taxes plus state and local income taxes OR the total of all sales taxes. Note that the higher limit is set to expire after the 2029 tax year unless Congress chooses to extend the legislation.
As always, if you have questions about your particular tax situation, we recommend you contact your tax preparer to discuss your situation in greater detail. Based on your 2024 returns, your tax preparer may be able to run a pro forma return for 2025 to see how the increase in SALT may impact your tax situation. If you’d like to discuss how these changes fit into your broader financial plan, contact your CJM adviser.
This material is intended for informational purposes only and should not be construed as tax or legal advice. Please consult your tax professional regarding your individual circumstances.
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