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50m ago

GOP Tax Reconciliation Bill With $40,000 SALT Cap Clears Congress

The measure moves to President Trump’s desk for signature after raising the state and local tax deduction to $40,000 with income thresholds, annual indexation, a 2030 sunset, preserved pass-through workarounds.

Senate Majority Leader John Thune with Senator John Barrasso, the GOP whip, left, and Finance Committee Chairman Mike Crapo, right, speaks to reporters after passage of the budget reconciliation package of President Donald Trump's signature bill of big tax breaks and spending cuts, at the Capitol in Washington, Tuesday, July 1, 2025.
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Overview

  • The Senate approved the reconciliation package on July 2 by a 50-50 vote broken by Vice President J.D. Vance and the House passed the Senate version on July 3, sending it to President Trump’s desk.
  • The bill raises the SALT deduction limit from $10,000 to $40,000 for taxpayers earning up to $500,000 and phases out the increase for those with higher incomes.
  • Under a five-year sunset, the cap will grow by 1% annually through 2029 before reverting to $10,000 in 2030.
  • The legislation retains state pass-through entity workarounds that allow business owners to fully deduct state and local taxes.
  • Analysts say the expanded cap will primarily benefit affluent homeowners in high-tax states, offer limited gains to middle-class filers and add roughly $325 billion to federal deficits.