We Make Tax Filing A Breeze
Seriously, if you’re in a high-tax state, you know the pain. That $10,000 SALT deduction cap? Absolute nightmare. Homeowners, anyone with a decent income in places like New York, California, New Jersey – we’ve all felt it. You pay your state and local taxes, a huge chunk of change, and then the feds basically say, “Nah, you can only deduct a tiny bit of that.” Just infuriating, right?
But guess what? Good news just landed! Believe it or not, something called the “One Big Beautiful Bill Act” (yeah, that’s its name, no joke) just threw us a lifeline. It’s temporarily bumping up the SALT cap, and it kicks in for the 2025 tax year. Let’s dig in, because you need to know what’s actually changing, who’ll really feel the relief, and how to get smart about your taxes now.
Super quick rundown: SALT stands for State And Local Taxes. Basically, it lets you write off some of those state and local income taxes (or sales taxes, if that’s your thing) plus your property taxes, but only if you itemize.
Before 2017, it was a free-for-all, in a good way. No federal limit. You could deduct it all, pretty much. Then the Tax Cuts and Jobs Act (TCJA) came along and, bam! Slapped that hard $10,000 ceiling on us. For families throwing $30K, $40K, even more, at state taxes? That was a gut punch, every single year.
That “One Big Beautiful Bill Act,” signed on July 4, 2025, has this amazing part that totally rewrites the SALT deduction rules.
Alright, vital point here: this bigger cap isn’t for everyone. Sadly. Income thresholds are still a thing.
The full, higher limit is mostly for households with a Modified Adjusted Gross Income (MAGI) of $500,000 or less (that’s for most single filers and married couples filing jointly) in 2025. Married filing separately? That threshold drops to $250,000. These income limits? They’re also going up 1% each year through 2029, just like the deduction.
Now, if your MAGI jumps above those thresholds, the big deduction starts to shrink. It tapers off, basically. That $40,000 cap gets cut by 30% of what you earn over the limit. But don’t completely stress – it won’t ever dip below the old $10,000 floor. So, if you’re a super high earner, you might end up back at that familiar $10,000 limit anyway. Still, it’s a win for many!
Honestly, the biggest winners here are high-income households in states with crazy high income and property taxes. Think about folks in the New York suburbs, parts of California, New Jersey, Connecticut. Their state and local tax bills usually blew past that old $10,000 federal limit.
Picture this: You’re a married couple in California, making, say, $450,000. You pay $25,000 in state income taxes and another $15,000 in property taxes. Total SALT? $40,000. Old rules? $10,000 deduction. New rules? The entire $40,000! That’s a huge chunk of change staying with you, not going to Washington.
For a lot of middle-income families, though, this probably won’t change much. Why? Many households simply don’t even hit the old $10,000 limit for state and local taxes. Plus, the standard deduction is still pretty generous (around $15,750 for singles, $31,500 for married filing jointly in 2025). For countless families, taking the standard deduction is just easier and makes more sense financially.
Here’s a big one to remember: this increased SALT cap is temporary. Unless Congress does something else, it’s set to snap right back to the original $10,000 (or $5,000 for married filing separately) starting in 2030.
So, while it’s a very welcome break, use it wisely while you can! Just know that the tax landscape could totally shift again in a few years.
The “One Big Beautiful Bill Act” isn’t just about SALT. It’s packed with a few other pretty major tax changes that, especially if you’re a high-income earner, you should definitely know about.
Good news here! That top federal income tax rate of 37% for high earners? It’s now permanent. Huge relief! That means no jump to 39.6% that was supposed to happen in 2026. This gives us so much more predictability for long-term financial planning. The current seven tax rates (10%, 12%, 22%, 24%, 32%, 35%, and 37%) are staying, with income brackets still adjusting for inflation.
Okay, this is a game-changer for anyone seriously thinking about wealth planning! Starting January 1, 2026, the federal unified estate and gift tax exclusion, along with the generation-skipping transfer (GST) tax exemption, is permanently going up to an inflation-indexed $15 million per person (that’s an unbelievable $30 million for married couples). This is a massive jump from the roughly $13.99 million inflation-adjusted amount in 2025, and crucial: it stops that scheduled dive to around $7 million that was coming. This provides awesome stability and flexibility for your legacy planning.
For folks 65 and up, there’s a new additional standard deduction of $6,000 per person starting in 2025. It’s meant to offer a little extra financial help. But, here’s the catch: this specific deduction is temporary, ending after 2028. It also phases out based on your income. So, if you’re in this age group, definitely double-check if you qualify and how much you can actually get.
To learn more about how you can reduce your taxes and save money, check out the helpful resources on our blog or contact us today to schedule a consultation.
