SALT REVISITIED 2025

The “Big BEAUTIFUL Bill” delivers one major win for residents of the Tri-State Area. This bill lifts the $10,000 cap on the State and Local Tax (SALT) deduction that was introduced in 2017 by the Tax Cuts and Jobs Act, raising it to $40,000 for single fillers and those married filing jointly with $20,000 for those married filing separately

This change is significant because many taxpayers in high-tax counties such as: Westchester, Bergen, Nassau, and across metro NYC routinely hit this $10,000 cap based solely on W-2 wages, even before factoring in their substantial real estate tax bills. After 2018, many filers simply stopped itemizing because the savings no longer justified the effort.

This increased cap quickly a political talking point with coastal “blue-state” residents who pay high state and local taxes feeling penalized, while many “red-state” residents with minimal or no itemized deductions barely felt the impact. For years, taxpayers in New York, New Jersey, and Connecticut relied on the federal deduction to soften the burden of high local taxes and the $10,000 cap disrupted that balance.

Previously, the system allowed, in most cases, the full deduction of the real estate and state and local taxes. However, as part of the 2018 Tax Bill, the standard deduction was increased to a generous $12,000 and has since increased. This has led to a nationwide reduction in the actual taxes charged to all Americans. That included states in the heartland Midwest and Western States and in the South that were not subject to large State and Local bill. So, if they were not itemizing at the time of the tax bill change, then they weren’t hurt but helped.

Ever since the passage of the SALT Cap taxpayers in the coastal Eastern and coastal Western blue states have been pushing for an increase on the cap or limit. Even Republican representatives in blue states felt the pressure to increase the Cap. Finally, this past year in 2025 the cap was expanded to $40,000 and became an annual change to the tax law set to sunset in 2030.

As New Jersey has the highest property taxes and Connecticut has the third highest, this should greatly help taxpayers in the suburban counties around New York City. Northern New Jersey, Southern and Eastern New York and Southern Connecticut counties. For example, Long Island taxpayers typically pay around $10,000 in property taxes. Many homeowners pay more in the $20,0000 – $30, 000 in the more affluent towns. Under the old regime the taxpayer would have been maxed out at $10,000 in his or her ability to claim any other state and local, e.g. (New York State Income Tax) withholding on Schedule A.

However, this bill will create an opportunity this coming tax season for taxpayers who previously itemized the state and local and obtained a significant benefit from this provision, to once again reap this benefit.

If you have questions concerning the above issue or any related tax question, please feel free to contact our office.

(1-888-382-7880) or
(212) 387-7880.
daniel@dmsilverlaw.com