CHAPTER 4 THE SALT DEDUCTION CHANGE AND WHAT IT MEANS FOR YOU When the federal government capped the SALT (state and local tax) deduction at ten thousand dollars, New Jersey homeowners felt it more than almost anyone else in the country. It meant that no matter how much you paid in property taxes or state income taxes, the maximum you could deduct was ten thousand. For someone paying thirty thousand in property taxes, this capped their deduction significantly and reduced a key tax benefit of homeownership in a high tax state. Now that the SALT cap has increased to forty thousand dollars, many people think this change automatically makes high taxes less painful. The reality is more nuanced. (Please note: This higher cap is in effect for tax years 2025 through 2029. The cap amount will increase by 1% each year. The cap is scheduled to revert to the original $10,000 limit for all taxpayers starting in the 2030 tax year, unless Congress acts again. The full benefit of the $40,000 cap is limited for higher- income earners. The deduction begins to phase out for taxpayers with a modified adjusted gross income (MAGI) over $500,000 ($250,000 for married couples filing separately). For those with MAGI above $600,000, the deduction is limited to the original $10,000 cap.)
What SALT Actually Covers SALT includes: • Property taxes
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