The $40,000 SALT cap: who gains and where it shrinks

For 2025 the cap is $40,000, or $20,000 married filing separately. It shrinks once modified AGI passes $500,000, but never below $10,000. For 2026 the cap is $40,400 and the shrinking starts above $505,000.

Clients who took the standard deduction under the old $10,000 cap may now be better off itemizing. Pull every client who paid more than $10,000 of state income and property tax and compare the two routes again.

• Homeowners in high property-tax areas.
• Clients with state income tax well above $10,000 but modified AGI under the phase-down start.
• Clients near the phase-down range, where a timing change in income can move the cap.

Many of your business owners use a state pass-through entity tax election. Whether that still makes sense now depends on the state and on where the owner sits against the phase-down, so revisit it rather than renewing it on autopilot.