How has the SALT deduction cap changed and how does it affect high-tax-state residents?

The 2017 tax law capped the federal deduction for state and local taxes (income or sales, plus property) at $10,000, which hit residents of high-tax states like California, New York and New Jersey hard. The 2025 tax law changed that: the cap is $40,000 for 2025 and $40,400 for 2026, increasing roughly 1% a year through 2029, then reverting to $10,000 in 2030 unless Congress extends it. It is not unlimited — above $505,000 of modified AGI in 2026 the cap phases down by 30 cents per dollar of excess, with a floor of $10,000, so the highest earners are back near the old limit. Because the amount and the phase-in rules can change with each bill, confirm the current figures on irs.gov before you plan. Many states also offer a pass-through entity tax election that moves the deduction to the business return.