The SALT deduction cap was raised to $40,000 for 2025 — who actually benefits?

The state and local tax (SALT) deduction cap was permanently raised from $10,000 to $40,000 for the 2025 tax year under the One Big Beautiful Bill Act (OBBBA). Here's who actually benefits — and who doesn't.

The basics:

• SALT covers state income taxes (or sales taxes if you choose), plus local property taxes.
• The new cap: $40,000 for most filers, $20,000 for married filing separately.
• Phase-out: The $40,000 cap gradually reduces once your MAGI exceeds $500,000 (single or married filing jointly).
• To claim SALT, you must itemize deductions — you cannot take both the standard deduction and SALT.

Who benefits most:

• Homeowners in high-tax states (California, New York, New Jersey, Illinois, Connecticut) who pay $15,000–$40,000 in combined state income tax + property taxes.
• High-income filers in these states who previously hit the old $10,000 cap immediately and lost tens of thousands in deductions.
• Example: A family in New Jersey paying $18,000 in property tax and $15,000 in state income tax = $33,000 in SALT. Under the old cap they could only deduct $10,000. Now they can deduct $33,000 — a potentially significant difference.

Who doesn't benefit:

• Filers who take the standard deduction ($15,750 single / $31,500 MFJ for 2025) — you get no SALT deduction regardless.
• Filers whose itemized deductions (including SALT) still don't exceed the standard deduction.
• Very-high-income earners above $500,000 MAGI face a phase-out of the higher cap.

Practical tip: If your combined SALT (state income/sales tax + property tax) plus mortgage interest, charitable donations, and other itemized deductions exceeds your standard deduction, it's worth itemizing for 2025.