SALT Deduction Update: What’s Changing for 2025

Now that we have covered how itemized deductions work in previous issues of the Tax Minute, here is an important update that may matter if you itemize your deductions in the future: the SALT deduction is changing.

“SALT” stands for State and Local Taxes, things like:

• State income tax

• Property taxes

• (or) Certain sales taxes

For the last several years, the maximum amount you could deduct was capped at $10,000 for most filing statuses.

What’s Changing in 2025

Beginning with the 2025 tax year, the One Big Beautiful Bill Act increases the SALT deduction limit:

• 2025: Up to $40,000

• 2026–2029: Slight annual increases

• 2030 and beyond: The limit returns to the original $10,000

High-income taxpayers may see their SALT deduction reduced. For 2025, the phase-down begins when modified adjusted gross income (MAGI) exceeds $500,000 (for most filing statuses). But even with reductions, the deduction would eventually revert to the $10,000 limit.

Why This Matters

If you live in a higher-tax area or pay significant property taxes, this temporary increase could make itemizing more valuable for you, but only if your total itemized deductions exceed the standard deduction.

Each week, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.

Next week, we provide an update on the charitable deduction for 2026.

Thanks for reading,

Brandy Sparkman, EA

I’ll keep learning so you can stay focused on what you do best.

See you next week for another Tax Minute.