Tax Changes for High Earners in High-Tax States | HelloBooks The SALT cap rises to $40,000 but shrinks above $500,000 of MAGI, and the AMT exemption phases out from $500,000. A planning checklist for high earners.
The higher SALT cap looks like a win for this group, but it shrinks as income rises and can interact with the AMT. These clients need a projection, not a headline.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
SALT cap 2025
$40,000
Applies: Tax years 2025 and 2026From IRS.gov · checked October 10, 2026
The SALT cap is $40,000 for 2025 and $40,400 for 2026, but it shrinks once modified AGI passes $500,000 for 2025, or $505,000 for 2026, and never drops below $10,000. The 37% bracket starts at $640,600 single and $768,700 joint for 2026.
The AMT exemption for 2026 is $90,100 single and $140,200 joint, phasing out from $500,000 and $1,000,000. Clients who deduct more state tax may give some of it back through the AMT.
For clients with a practice or side business, current books give you the income figure the SALT phase-down depends on. Run the projection in the fourth quarter, when there is still time to time payments.
The plain-English summary for business owners
Schedule A · state and local taxes
Individuals · alternative minimum tax
Reference · 2025 and 2026
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.