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High-Tax States Celebrate Trump’s SALT Relief

Published

July 3, 2025

President Trump’s sweeping tax reform package, the “Big Beautiful Bill,” has officially passed the House and is set to provide significant tax relief, particularly for residents in high-tax states. At the heart of this legislation is a substantial increase in the State and Local Tax (SALT) deduction, promising to put more money back in the pockets of millions of American taxpayers.

Understanding the SALT Deduction

The SALT deduction allows taxpayers who itemize their taxes to deduct state and local property, income, or sales taxes from their federal taxable income. Since 2017, this deduction had been capped at just $10,000, disproportionately affecting taxpayers in high-tax states like New York, California, Connecticut, and New Jersey.

Under Trump’s new legislation, the SALT deduction cap rises significantly—from $10,000 up to $40,000. Married couples filing jointly with incomes up to $500,000 will benefit most notably, potentially saving thousands annually in federal taxes.

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Who Benefits the Most?

This expanded deduction is particularly beneficial for homeowners and middle- to upper-middle-class taxpayers in states with higher local taxes. For example, a family earning around $250,000 annually in New Jersey or California could see savings upwards of $3,000 to $5,000 per year.

Moreover, the increased SALT deduction is designed to provide substantial relief without excessively benefiting the ultra-wealthy, as eligibility phases out beyond certain income thresholds.

Additional Highlights of the “Big Beautiful Bill”

Aside from the SALT cap relief, Trump’s tax bill includes several provisions aimed at supporting working families and seniors:

Elimination of federal taxes on overtime and tip income.
Enhanced deductions specifically targeted toward seniors.
Increased child tax credits.
New deductions on interest for loans on U.S.-manufactured vehicles.

Long-Term Implications and Potential Drawbacks

While taxpayers in high-tax states are set to enjoy immediate relief, it’s important to note that the current increase in the SALT deduction is temporary, slated to expire after 2025 unless Congress acts to extend it further.

Critics have raised concerns about the overall fiscal impact of the bill, citing estimates of increased national debt due to these tax reductions. Additionally, the legislation includes substantial cuts to certain social welfare programs, prompting debates on long-term sustainability.

What You Can Do Now

Taxpayers should consider reviewing their tax strategies immediately:

Evaluate if itemizing your deductions now provides more benefits under the new $40,000 cap.
Consult with a financial advisor or tax professional to understand how these changes directly impact your specific financial situation.

Final Takeaway

Trump’s “Big Beautiful Bill” represents a notable shift in tax policy, delivering meaningful relief to taxpayers who have been heavily burdened by the SALT cap since 2017. With significant savings on the horizon, especially for homeowners in high-tax states, the bill underscores the administration’s ongoing commitment to returning dollars directly to American families.