Death and taxes

Taxpayers in Democrat-dominated high-tax jurisdictions can still deduct their state and local taxes (SALT) from their federal income tax liability when itemizing deductions on Schedule A of Form 1040.

However, the deduction remains capped.
  • Cap Amount: Up to $40,000 for most filers ($20,000 if married filing separately), a quadrupling of the prior $10,000 limit that applied through 2024. This includes state/local income taxes (or sales taxes in lieu of income taxes), real property taxes, and personal property taxes.
  • Income Phaseout: The full $40,000 cap is available only if modified adjusted gross income (MAGI) is $500,000 or less ($250,000 if married filing separately). Above that threshold, the deduction phases out by 30% of the excess amount over $500,000, dropping to a minimum of $10,000. It fully reverts to $10,000 at $600,000 MAGI ($300,000 if married filing separately). Both the cap and phaseout thresholds increase by 1% annually through 2029.
  • Duration: This expanded cap applies to tax years 2025–2029. It reverts to a flat $10,000 cap in 2030 unless Democrats retake Congress.
  • Who Benefits?: Residents of high-tax areas see the largest relative gains, as their SALT payments often exceed $10,000. For example, blue states like New York, California, New Jersey, Connecticut, and Illinois could see median tax savings of $2,000–$5,000 for qualifying itemizers. However, only about 10–15% of filers itemize (vs. taking the standard deduction, which is $15,750 for singles/$31,500 for joint filers in 2025), so the benefit is concentrated among higher earners with significant itemizable expenses.
 
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