If the $10,000 cap on state and local tax (SALT) deductions limits your write-offs, here’s good news: the OBBBA temporarily increases the cap starting in 2025.
- $40,000 if married filing jointly, or
- $20,000 if married filing separately.
- $500,000 (joint filers), or
- $250,000 (married filing separately).
The phaseout reduces your SALT deduction by 30 percent of MAGI in excess of the threshold, with a floor of $10,000 or $5,000. For example, if your MAGI is $550,000 as a joint filer, you can deduct only $25,000 of your SALT, not the full $40,000.
You can still choose to deduct sales taxes instead of income taxes—useful if your income taxes are low but sales or property taxes are high.
Importantly, state-level SALT deduction workarounds for pass-through entities (such as S corporations, partnerships, or LLCs) remain in place. These allow business entities to pay SALT at the entity level and pass through the deduction to owners—effectively bypassing the federal cap.
To maximize your deduction, consider managing your MAGI by:
- Spreading capital gains over multiple years;
- Staging Roth IRA conversions; or
- Leveraging your state’s SALT workaround, if available.
How We Can Help
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.
Welcome to the Sterling Standard of business! Want to learn more? Schedule a meeting with our tax planning team here: https://www.sterling.cpa/contact-us/