How does the SALT deduction cap affect me?

The SALT cap limits how much state and local tax (income or sales tax plus property tax) you can deduct on a federal itemized return. The 2017 tax law set it at $10,000, but the 2025 tax law (the One Big Beautiful Bill Act) raised it sharply: $40,000 for 2025 and $40,400 for 2026, rising about 1% a year through 2029 before dropping back to $10,000 in 2030 unless Congress acts again. The higher cap phases down for high earners — once modified AGI passes $505,000 in 2026, the cap falls by 30 cents for every dollar above that line, but never below $10,000. The practical effect is that itemizing is worth re-checking if you stopped bothering under the old $10,000 cap: homeowners in high-tax states like California, New York and New Jersey who were capped out may now clear the standard deduction again. If you own a business, many states also offer a pass-through entity tax workaround. To see whether itemizing beats the standard deduction for you, try wealthserene.com/tools/tax-strategies.