How to maximize Trump’s bigger SALT deduction limit for 2025
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If you live in a high-tax state, you may see some income and property tax relief for 2025, thanks to the change enacted through President Donald Trump’s “big beautiful bill.”
republicans trillions of dollars of legislation Temporarily increased the federal deduction limit for state and local taxes, known as SALT.
The SALT deduction cap is $40,000 for 2025; that figure is $10,000 in 2024, which includes state and local income taxes and property taxes. If you specify the tax deductions in detail, you can claim the SALT deduction.
The $40,000 cap increases 1% annually through 2029, while the cap returns to $10,000 in 2030; That leaves five years to take advantage of the bigger tax cut.
“I definitely reach clients with historically high state and local taxes,” said certified financial planner JoAnn May of Forest Asset Management in Riverside, Illinois. He is also a certified public accountant.
Many taxpayers cannot claim the SALT deduction because 90% of filers Do not itemize based on the latest IRS data. But experts say the tax break primarily benefits high-income homeowners.
Residents of New York, California, New Jersey, Massachusetts and Connecticut could see the biggest tax relief from the higher SALT limit. September analysis From Redfin. The real estate site estimates that average resident savings in each of these states could be more than $3,000.
If you qualify for the higher SALT deduction for 2025, here’s how to maximize your tax deduction before the end of the year, according to financial experts.
‘Take the blame for the interruptions’
One of the difficulties in claiming the SALT deduction is that your itemized tax deductions, including SALT, charitable donations, the medical expense deduction and others must exceed the standard deduction. The standard deduction for 2025 is $15,750 for singles and $31,500 for married couples filing jointly.
One way to get around these thresholds is to “load deductions,” such as paying your property taxes for 2026 before the end of the year, according to Abigail Rose, CFP, director of tax planning at Keeler & Nadler Family Wealth in Dublin, Ohio.
That could be combined with a larger philanthropic gift in 2025 through what’s called a donor-advised fund, said Rose, who is also a CPA. Transferring money to a donor-advised fund provides an upfront tax deduction but serves as a charitable checkbook for future gifts.
Watch out for ‘SALT torpedo’
For 2025, once your modified adjusted gross income exceeds $500,000, the $40,000 SALT deduction limit begins to phase out or decrease. Once you exceed $600,000, the SALT deduction limit drops to $10,000.
When your earnings fall between $500,000 and $600,000, you may experience what some experts call “indecision.” The “SALT torpedo,” or artificially high tax rate, increases your income while losing part of the deduction.
“You really need to follow the numbers,” said May of Forest Asset Management. But “there’s some interesting planning for this.”
For example, self-employed taxpayers can change the timing of income and expenses, which could reduce MAGI for 2025 if necessary, he said. Of course, this is more difficult for W-2 workers.
But experts say if you’re on the brink of MAGI thresholds, you can avoid selling investments or making year-end Roth individual retirement account conversions that increase your income.
