Close Menu
Webpress News
    What's Hot

    Luxury Mayfair Penthouse Haunted by Leaky Roofs and Noisy Lifts: Al Fayed Family’s Legal Battle Continues

    July 12, 2025

    Katie Taylor Triumphs Over Amanda Serrano in Epic Trilogy Bout at Madison Square Garden

    July 12, 2025

    Scorching Heatwave Hits Scotland and Northern Ireland: Temperatures Set to Soar Above 31°C!

    July 12, 2025
    Facebook X (Twitter) Instagram
    Facebook X (Twitter) Instagram Pinterest Tumblr
    Saturday, July 12
    Webpress NewsWebpress News
    Subscribe
    • Home
    • News
    • Politics
    • Business
    • Sports
    • Magazine
    • Science
    • Tech
    • Health
    • Entertainment
    • Economy
      • Stocks
    Webpress News
    Home»News»Business

    New Tax Law Boosts SALT Deduction Cap: Who Will Win and Who Will Miss Out?

    July 11, 2025 Business No Comments4 Mins Read
    Share
    Facebook Twitter LinkedIn Pinterest Email

    The recent enactment of a comprehensive tax-and-spending-cut legislation has led to significant changes in the ability of federal income tax filers to claim deductions for state and local taxes (SALT). This new law will increase the cap on SALT deductions from the previous limit of $10,000 to an impressive $40,000 for the tax year 2025. Following that, the cap will see annual adjustments of 1% for the tax years 2026, 2027, 2028, and 2029. This move is anticipated to bring some financial relief to certain taxpayers, while the overall impact may be limited to a select few.

    The SALT deduction encompasses the ability for federal taxpayers to deduct either their state and local income taxes or state and local general sales taxes. Additionally, property taxes are also deductible, provided that their income or sales taxes remain below the established cap. However, the revised cap of $40,000 appears to predominantly benefit a minority of federal income filers. A closer examination reveals various categories of taxpayers who stand to benefit and those who may not.

    Itemizers are the primary beneficiaries of the SALT deduction as it is only applicable to those who itemize deductions on their federal tax returns. Before the changes implemented by the Tax Cuts and Jobs Act of 2017, there were no caps on SALT deductions, allowing for greater flexibility and deductibility of state and local taxes. The introduction of a $10,000 cap effectively pushed a substantial number of taxpayers away from itemizing their deductions in favor of the expanded standard deduction. Tom O’Saben, the director of tax content and government relations at the National Association of Tax Professionals, notes that while previously, the majority of his clients would itemize, post-2017, the majority now opt for the standard deduction.

    The new provisions within the recently enacted law do provide an awakening to some of these taxpayers, allowing a limited number to possibly resume itemizing their deductions. However, this resurgence is tempered by the increase in the standard deduction for 2025, which will rise to $15,750 for single filers and correspondingly for heads of households and married couples filing jointly. This adjustment ensures that a significant portion of taxpayers may still find the standard deduction more beneficial than itemizing, thus dampening the overall number that would choose to itemize in light of the new SALT cap.

    Taxpayers residing in high-tax states or cities, such as California and New York, may experience the most significant advantages under the revised SALT cap, particularly if their earnings position them to deduct up to $40,000. This benefits homeowners in those areas who tend to itemize due to combined state, local tax, and mortgage interest deductions. This benefit, however, is not restricted solely to high-income taxpayers; individuals living in states without income taxes but with significant sales or property taxes may also see favorable outcomes.

    Notably, the law imposes certain limitations. For instance, individuals with modified adjusted gross incomes (MAGI) exceeding $500,000 may only partially benefit from lowering their SALT deduction. Filers with MAGI exceeding $600,000 are capped at a relatively low deduction of just $10,000.

    Moreover, taxpayers who do not itemize will be unable to utilize the higher SALT cap. It is important to recognize that while their itemized deductions may not surpass the standard deduction threshold, they will still profit from the higher standard deduction, likely resulting in a lower tax bill than if they itemized. Thus, while the upper limits of the SALT deduction could be deemed beneficial, the reality for many taxpayers is that the new law may not significantly impact their tax liabilities, especially for those opting not to itemize.

    Partners in pass-through entities, like LLCs or S-Corps, are also a focal point under this legislation. These individuals typically pay entity-related taxes through their own tax returns and can potentially benefit from the SALT deduction adjustments. However, many entities might sidestep concerns over the SALT cap due to previous measures taken post-2017, which allowed for deductions at the entity level. This results in a significantly advantageous position for partners and shareholders, leading to a favorable tax structure.

    In conclusion, while the enactment of this new legislation poses potential advantages for specific taxpayers, the benefits may be limited to particular demographics, with a considerable amount of filers remaining unaffected or only marginally impacted. Therefore, it becomes crucial for individuals to assess their unique tax scenarios and evaluate the implications of these changes carefully.

    Keep Reading

    AI Revolution: Nvidia CEO Warns of Job Losses Amid Productivity Gains and Innovation Challenges

    Bad Bunny’s Concert Residency Set to Boost Puerto Rico’s Economy by $200 Million as Tourism Soars

    Trump’s Advisors Rally Behind Unyielding Attacks on Fed Chair Powell: A New Offensive Unfolds

    New Government Code Set to End Shocking Parking Charges and Protect Drivers from Unfair Fines

    Tariff Turmoil: Trump’s Manufacturing Policy Leaves U.S. Factories in a Hiring Slump

    National Trust to Slash 550 Jobs Amid Rising Costs and Financial Strain

    Add A Comment
    Leave A Reply Cancel Reply

    Luxury Mayfair Penthouse Haunted by Leaky Roofs and Noisy Lifts: Al Fayed Family’s Legal Battle Continues

    July 12, 2025

    Katie Taylor Triumphs Over Amanda Serrano in Epic Trilogy Bout at Madison Square Garden

    July 12, 2025

    Scorching Heatwave Hits Scotland and Northern Ireland: Temperatures Set to Soar Above 31°C!

    July 12, 2025

    Jellycat’s Supply Cut Leaves Independent Shops in Shock: “It’s a Sour Taste!

    July 11, 2025

    Subscribe to News

    Get the latest sports news from NewsSite about world, sports and politics.

    Facebook X (Twitter) Pinterest Vimeo WhatsApp TikTok Instagram

    News

    • Politics
    • Business
    • Sports
    • Magazine
    • Science
    • Tech
    • Health
    • Entertainment
    • Economy

    Company

    • About
    • Contact
    • Advertising
    • GDPR Policy
    • Terms

    Services

    • Subscriptions
    • Customer Support
    • Bulk Packages
    • Newsletters
    • Sponsored News
    • Work With Us

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    © 2025 Developed by WebpressNews.
    • Privacy Policy
    • Terms
    • Contact

    Type above and press Enter to search. Press Esc to cancel.