SALT Deduction Cap Raised to $40K: Who Really Benefits?

You might’ve heard: Congress just raised the SALT deduction cap from $10,000 to $40,000.

Sounds like a massive win for business owners, right?

➡️ It is—but only if you fall into the right category.

What Is the SALT Deduction Cap?

The SALT deduction cap limits how much state and local taxes you can deduct on your federal return. The original limit was $10,000, but now it’s been raised to $40,000 for qualifying taxpayers through 2029.

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Who Actually Benefits From the Higher SALT Deduction Cap?

This change is a big deal if:

• ✅ You file jointly and your income is under $500K
• ✅ You’re in a high-tax state (California, New York, New Jersey, etc.)
• ✅ You don’t already use a pass-through entity workaround (PTE tax election)

For these business owners, the new SALT cap means up to $30,000 more in deductions every year through 2029.

That’s real cash flow back in your business. Zing! 😍

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⚠️ Who Might Be Left Out of the SALT Deduction Increase?

• If you're making over $500K, the $40K deduction phases out fast. By $1 million AGI, it’s gone.
• If you’re already using a pass-through SALT workaround, you may not see much change.

In fact, watch out: That workaround could be on the chopping block after 2026, especially for service-based businesses.

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So What’s the Play?

The rules just shifted—but that doesn’t mean they work for you automatically.
Some business owners will get an extra $30K in deductions.
Others? Nothing.

And with some strategies possibly sunsetting after 2026, the window’s closing fast.

If you’re making decisions about compensation, entity structure, or how to lower your tax bill—this is the moment to get proactive.

👉 Book a call and let’s talk through where you stand, what’s at risk, and what to do before these rules change again.

Schedule your strategy call here

📚 Read More on OBBBA Tax Changes

Stay ahead of what the One Big Beautiful Bill Act (OBBBA) means for your business and taxes:

• QSBS Tax Strategy: How to Qualify and Save Big
• Estate Tax Exemption 2025: What Business Owners Need to Know
• Small Business Tax Deductions: Ultimate Guide for 2025