Reply to 2025 SALT Deductions

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]if your MAGI is under $500,000.  Phases down to $10,000 if MAGI is over $600,000[/quote]

And if you itemize.  I wonder how many people: 1) have state tax deductions over $10k, 2) make under $600k MAGI, and 3) itemize.  In many states, if you itemize federal then you have to itemize state too, and if you're only substantial itemized deduction is state taxes, then you'll get no deduction at all at state level (since state taxes are not deductible on state taxes).  That seems like a pretty small universe.[/quote]

Odds are you're itemizing if you're paying mortgage interest, no? Between SALT and interest, that's enough to get us over the standard deduction even before we take charitable donations into account. Especially now that the SALT cap is significantly higher than the standard deduction amount.[/quote]

Before the SALT cap was introduced in 2017, 80% of households making between $100-500K were itemizing. After the cap was set at 10K only 22.5% itemized. Raising the cap again is going make a huge difference, especially in this area. [/quote]

The standard deduction was also doubled in 2018, so that definitely had an impact. A lot more people in HCOL areas will itemize now, people in LCOL places will still have a hard time hitting $30K+ in itemized deductions. [/quote]

Yep.  The standard deduction for a couple is $31,500 this year.  Even with state taxes, it will be hard for most people to get over that in itemized deductions even with the increased limits.  I’d imagine this will only really help folks in the $400-$500k range.[/quote]

Not all homeowners are filing jointly. I make $200k and was easily hitting the itemization level even with the cap. My property taxes alone are $10k, and I don’t even own a particularly expensive home for my area. [/quote]

The fact that the threshold and phase-out are the same for single and MFJ is an odd quirk of this new rule.  If DH and I were not married, we could deduct $80k in state taxes, but because we are, we can only deduct $10k.  We already had a marriage penalty, but this makes it really big.  I bet we could save over $30k in taxes by divorcing.[/quote]

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