Overview

• The House passed a budget reconciliation bill on May 22 that would raise the SALT deduction cap from $10,000 to $40,000 ($20,000 for married filing separately) with 1% annual increases through 2033.
• The existing $10,000 SALT limit is set to expire at the end of 2025, potentially reverting unless Congress enacts a new tax measure.
• Tax Foundation modeling indicates the proposed cap boost would add about $350 billion to the federal deficit over ten years compared with extending current limits.
• High-income filers making under $500,000 in states such as California, New York and New Jersey stand to see the biggest reductions in their federal tax bills.
• The House bill would eliminate a popular state-level SALT workaround for specified service trade or business owners, prompting AICPA and other groups to lobby for its reinstatement.