A major tax change is coming for the 2025 filing season: the federal cap on the state and local tax (SALT) deduction is rising from $10,000 to $40,000.
For millions of taxpayers—especially homeowners in high-tax states—this could open the door to meaningful tax savings.
Why This Matters
Since 2018, the $10,000 SALT cap severely limited how much property, income, and sales tax homeowners could deduct. With the new $40,000 cap, many households may find that itemizing (instead of taking the standard deduction) once again puts more money back in their pockets.
Who Benefits the Most
The increase is expected to help:
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Homeowners in high-tax states like CA, NJ, NY, MA, and IL
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Taxpayers with property taxes or state income taxes above $10,000
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Households with moderate to upper-middle income — since the full benefit begins to phase out as income rises
Generally, the higher cap applies to those with MAGI up to $500,000 (or $250,000 for married filing separately). Above that, the deduction gradually decreases.
How Long it Lasts
The expanded cap is set to apply to tax years 2025 through 2029. Unless Congress extends it, the SALT deduction limit will revert back to $10,000 starting in 2030.
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✅ Takeaway: If you pay high state or local tax bills, this new SALT cap could put real savings back on your side. It’s one of the most impactful changes for 2025 — and a timely reminder to review your tax strategy as the new year approaches.
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