What changed in 2025: The cap on the state and local tax (SALT) deduction increases:
From $10,000 to $40,000, if you’re filing jointly (MFJ) or as head of household (HOH)
From $10,000 to $20,000, if you’re married filing separately (MFS)
NOTE The limit increases by 1% each year through 2029
You can claim this higher deduction if:
You itemize deductions instead of taking the standard deduction
Your tax year starts in 2025 through 2029
Your Modified Adjusted Gross Income (MAGI) is within the threshold.
The SALT deduction begins phasing out after $500,000 MAGI and is eliminated at $1,000,000 MAGI.
MAGI is equal to the Adjusted Gross Income (AGI) plus some foreign earned income exclusions (see IRC §911, 931, and 933 for details).
What this means for you:
If you pay high property taxes or live in a high-tax state, this change could:
Let you deduct more of the taxes you’re already paying
Help you reduce your taxable income
Lower your overall tax bill
Example: If you are a homeowner in a high-tax area with a $600,000 home, you could see thousands more in deductible taxes due to the higher limitation.