The One Big Beautiful Bill Act, enacted on July 4, 2025 as Public Law 119-21, introduced a wide range of changes that will impact tax returns for the 2025 tax year and beyond. There are several changes to for itemized deductions.
The One Big Beautiful Bill Act increases the limit for deducting State and Local Taxes. SALT was limited to $10,000 for 2025 by TCJA. Now, the SALT deduction will be increased for the next five years. The deduction will be $40,000 for 2025 and increase by 1% each year, until it reverts to $10,000 in 2030.
- 2025: $40,000
- 2026: $40,400
- 2027: $40,804
- 2028: $41,212
- 2029: $41,624
- 2030: $10,000
The SALT deduction is phased out for taxpayers once their income exceeds a threshold of an AGI of $500,000 and the deduction is reduced by $50 for each $1,000 over the threshold.