After years of debate, the U.S. House of Representatives passed a bill that raises the cap on the state and local tax deduction, known as SALT, a major shift in federal tax policy. President Donald Trump signed the bill into law on Friday, July 4, hailing it as a win for suburban taxpayers and a central feature of his “Big Beautiful Bill.”
The SALT deduction limit has now increased from $10,000 to $40,000 for households earning $500,000 or less for the next five years starting in 2025. The benefit starts to phase out, or decrease, for consumers who earn more than $500,000 of income. The deduction limit will rise by 1% each year through 2029 before reverting to the $10,000 limit in 2030, offering high taxpayers short-term relief while maintaining the temporary shift.