Huge SALT tax deduction changes could save most Americans big money
SALT tax deduction changes could have a big impact at tax time.
Most taxpayers won't benefit from one of the more hotly debated provisions in the recently passed "One Big Beautiful Bill."
However, specific groups of higher-income earners stand to gain significantly from what the Tax Foundation has described as a "generous" change to the deduction for state and local taxes (SALT).
Under the legislation, which now heads to the Senate, taxpayers who itemize deductions may deduct up to $40,000 in SALT payments - including state income taxes, sales taxes, and property taxes - against their federal taxable income.
This represents a fourfold increase from the current $10,000 limit imposed by the Tax Cuts and Jobs Act (TCJA) of 2017.
“I think there will be some people benefiting from the higher SALT deduction, but it won't be everyone,” said David Haas, a certified financial planner with Cereus Financial Advisors.
The TCJA's original impact was dramatic: it reduced the number of taxpayers who itemized deductions from about one-third to roughly 9% by doubling the standard deduction while capping SALT.
The new legislation essentially reverses this trend for higher earners in expensive locations.
