Calculate Your Gain Under the New SALT Cap
The state and local tax deduction, a write-off that primarily benefits higher-income Americans living in high-tax areas, was one of the most disputed provisions of Trump’s tax-and-spend bill.
The law raises the SALT cap from $10,000 to $40,000 for five years with a phase out for taxpayers that earn over $500,000 a year.
Answer five simple questions about your taxes to see your estimated gain from an increased SALT deduction.
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A higher SALT cap overwhelmingly benefits more affluent Americans. For instance, a married couple in Washington, DC is unlikely to receive any money back if their income is below $200,000.
Households Earning Up to $500K Would Get Thousands More Back
Source: Committee for a Responsible Federal Budget
Note: Estimates based on a married couple filing jointly in Washington, DC who own a home worth five times their annual income and has combined charitable and mortgage interest deductions worth 12% of income. All references to income represent the adjusted gross income.
The lopsided benefits of a bigger SALT write-off made it one of the most contentious pieces of Trump’s budget bill. The gains disproportionately go to wealthy residents of blue states, where state and local taxes tend to be higher. This made the increased cap unpopular to most Republicans.
But in a tight House where few votes can be spared, a handful of Republicans from swing districts in New York, New Jersey and California staked their support of the bill on a higher deduction for state and local taxes. The House bill set the SALT deduction limit at $40,000.
Blue Districts Gain More From SALT Cap Hike
Source: Internal Revenue Service Statistics of Income Division ZIP Code data
Note: As of 2022 tax year. ZIP Codes that overlap multiple districts are weighted in proportion to land area.
After extended debate, the Senate largely kept the House’s changes to SALT intact for the final version of the bill. While the House set the SALT cap permanently at $40,000, the Senate only extended the higher deduction for five years. After that the write-off reverts back to $10,000.