SALT Cap Increase
OBBB Act raises the state and local tax deduction cap from $10,000 to $40,000.
What Changed
SALT Cap History
*For MAGI under $500,000 | **Unless Congress acts
Who Benefits
The increased SALT cap primarily helps taxpayers in high-tax states who itemize deductions:
✅ Biggest Beneficiaries
- Homeowners in high-property-tax areas
- High earners in states with income tax
- Residents of NY, NJ, CT, CA, IL
- MAGI between $200K-$500K
- Those who itemize deductions
❌ Limited/No Benefit
- MAGI over $500,000 (cap stays at $10K)
- Those who take standard deduction
- Low-tax states residents
- Renters with no property taxes
- Lower-income taxpayers
What Counts as SALT
✅ Qualifying Taxes
- State income tax (or sales tax election)
- Local income tax (city, county)
- Property tax (real estate)
- Personal property tax (vehicles, if based on value)
- Foreign taxes (in lieu of state income tax)
❌ Non-Qualifying
- Federal taxes (income, payroll)
- Transfer taxes (real estate)
- Car registration fees (unless value-based)
- Special assessments (for local benefits)
- Penalties and interest
Examples & Savings
New Jersey Homeowner
• Property taxes: $18,000
• State income tax: $12,000
• Total SALT: $30,000
• MAGI: $350,000 (under $500K limit)
Old deduction: $10,000 cap
New deduction: $30,000 (full amount)
Additional savings: $20,000 × 32% = $6,400
High-Income California Resident
• Property taxes: $25,000
• State income tax: $35,000
• Total SALT: $60,000
• MAGI: $600,000 (over $500K limit)
Deduction: $10,000 (cap remains at old level)
Additional savings: $0 (no benefit)
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