US Insights

This change provides new planning opportunities, particularly for individuals in high-tax states or those with significant property and income tax liabilities.

Find out what’s changed, who is affected, and how to take action before year-end.

What’s Changed?

Under the new legislation:

• The SALT deduction cap increases from $10,000 to $40,000 for individual filers
• For married couples filing separately, the cap increases to $20,000
• The deduction begins to phase down for taxpayers with Adjusted Gross Income (AGI) over $50,000, and is fully reduced back to $10,000 once AGI reaches $600,000

This change represents the first meaningful adjustment to the SALT cap since its introduction in 2017, offering potential relief for many taxpayers, particularly those in high-tax states such as California, New York, New Jersey, and Connecticut.

Who Is Affected?

The expanded deduction will be most relevant for:

• Taxpayers in high-tax states with significant state income, property, or local taxes
• Individuals and families with AGIs under $600,000, who stand to benefit from the increased cap before the phase-out applies

For higher-income taxpayers above the phase-out threshold, the impact of this change will be limited – the cap effectively remains at $10,000.

How to Take Action

1. Review your 2025 SALT payments

Include all relevant state and local taxes – such as state income tax, property tax, and personal property tax – in your review. Understanding the full picture helps determine whether you can make use of the higher cap.

2. Assess your AGI level

If your AGI is below $600,000, you may benefit from accelerating certain SALT payments (where feasible) into 2025 to maximise the available deduction.

3. Coordinate with your advisers

Work with your US tax adviser to ensure your deductions are properly timed and structured to fall within the expanded limits, and to evaluate whether itemising remains beneficial under your broader 2025 tax position.

Next Steps

For many taxpayers, the raised SALT cap provides a valuable opportunity to reduce 2025 taxable income, particularly for those living in states with higher property and income taxes. With the phase-out threshold limiting benefits for higher earners, early planning is key to ensure you capture available deductions.

Blick Rothenberg’s US/UK Private Client team supports individuals and families with complex cross-border tax matters, including federal and state income tax planning. To discuss how the revised SALT deduction cap could affect your 2025 return, please contact your usual adviser or reach out to our US/UK team.