Tax Deductions Might Go Up. Would You Benefit?

This meaty budget reconciliation bill includes a provision to increase the state and local tax, or SALT, deduction limit. If the changes make it through the Senate, certain taxpayers could see big tax breaks.

The SALT deduction is a tax break that allows people who itemize to deduct certain taxes from their federal taxable income. Eligible deductions include property taxes and a choice of state and local sales taxes or state and local income taxes.

The SALT deduction is currently capped at $10,000 ($5,000 for those married filing separately) and is set to expire at the end of 2025.

The House bill would raise the SALT cap to $40,000 ($20,000 for those married filing separately), four times higher than the current limit. The cap and income thresholds would increase by 1% annually through 2033. Taxpayers with a modified adjusted gross income over $500,000, would have a reduced deduction, but it would not go lower than $10,000.

But the details could change as the bill moves through the Senate.

High-earners making less than $500,000, especially those living in higher-tax states such as California and New York, are positioned to get the biggest breaks.

These taxpayers are generally paying higher state income and property taxes, and could claim larger deductions under the proposed changes. The cap increase could lower these federal tax bills by thousands of dollars.

People who don’t pay state income taxes, don’t itemize and don’t own homes likely wouldn’t benefit from the changes, says Miklos Ringbauer, a certified public accountant in Los Angeles.

We sifted through Reddit forums to get a pulse check on what users say about the SALT deduction. We used an AI tool to help analyze and summarize the feedback. Here’s what rose to the top of our analysis. People post anonymously, so we cannot confirm their individual experiences or circumstances.

The comments reflect a mixed and complex debate about the SALT deduction cap. Many users, particularly those in high-tax states like California, New York, and New Jersey, express frustration with the current $10,000 cap, arguing it leads to double taxation and disproportionately affects residents in these states.

Some commenters point out that the cap particularly impacts HENRYs (High Earners, Not Rich Yet) and married couples, who face what they view as an unfair marriage penalty.

Others defend the cap, arguing that raising it would primarily benefit high earners and that states with lower taxes shouldn’t subsidize high-tax states.

Hold off on changing your tax strategy until the bill’s future is certain.

“This is not a law yet, so you can’t fully plan for it,” Ringbauer says. In the meantime, you can explore how the proposed changes might impact you.

Track the bill’s progress. Taxpayers can also call their senators and express their concerns with the bill or what they like about it, Ringbauer says, which could help shape the final version.

Calculate whether itemizing your deductions would be greater than taking the standard deduction. (The standard deduction for 2025 is $15,000 for single filers, $22,500 for heads of household and $30,000 for taxpayers who are married filing jointly.)

If you’re considering itemizing, explore ways to maximize your deductions, such as prepaying property taxes or increasing charitable donations.

Ringbauer suggests plugging your numbers into tax software programs and online tax calculators, or working with a tax professional. Professionals can help you make the most tax advantageous choices, he says.