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.
Starting in tax year 2025, the limit for the amount of state and local taxes that can be deducted as an itemized deduction is increased. Prior to 2025, the limit was $10,000 ($5,000 for Married Filing Separately). The SALT deduction will increase to $40,000 in 2025 and will increase by 1% each year thereafter through 2029, reverting to $10,000 in 2030.
The following limits apply for 2025 through 2030:
- 2025 - $40,000 ($20,000 for Married Filing Separately)
- 2026 - $40,400 ($20,200 for Married Filing Separately)
- 2027 - $40,804 ($20,402 for Married Filing Separately)
- 2028 - $41,212 ($20,606 for Married Filing Separately)
- 2029 - $41,624 ($20,812 for Married Filing Separately)
- 2030 - $10,000 ($5,000 for Married Filing Separately)
The SALT deduction begins phasing out for taxpayers once their income exceeds the AGI threshold of $500,000 ($250,000 for MFS), reduced by $50 for each $1,000 over the threshold.
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