The SALT cap went up to $40,000 for 2025. Should I itemize now?

The SALT (State and Local Tax) deduction cap increased from $10,000 to $40,000 for 2025 under the One Big Beautiful Bill Act (OBBBA). This is a major change that could make itemizing worthwhile for many taxpayers who previously found the $10,000 cap too limiting.

Who benefits most:

• Homeowners in high-tax states like California, New York, New Jersey, Illinois, and Massachusetts who pay significant property taxes plus state income taxes.
• Taxpayers whose total SALT burden (state income/sales taxes + property taxes) was consistently above $10,000 and is now potentially fully deductible up to $40,000.

Key details:

• The $40,000 cap applies to single filers and married filing jointly. Married filing separately is capped at $20,000.
• There is a phase-out for high earners: the cap begins to reduce for MAGI above $400,000 (approximately), so very high-income taxpayers may not receive the full benefit.
• This higher cap runs through 2029, then reverts to $10,000 in 2030 unless extended.

Should you itemize?

To benefit, your total itemized deductions must exceed the 2025 standard deduction:

• $15,000 (single)
• $30,000 (married filing jointly)
• $22,500 (head of household)

If your SALT alone is $25,000 and you have meaningful mortgage interest and charitable contributions, itemizing likely beats the standard deduction. Use the IRS Tax Withholding Estimator or consult a tax professional to run the numbers for your situation.

Example:

A married couple in New Jersey pays $18,000 in property taxes and $9,000 in state income taxes = $27,000 SALT. Under the old cap, they could only deduct $10,000. Under the 2025 cap, they deduct the full $27,000 — a $17,000 increase in itemized deductions.