When considering the extension of the SALT cap in 2025, it’s important to understand the interaction between the SALT cap and the AMT exemption.
TOPLINE TAKEAWAYS:
- High-income taxpayers in high-tax states already faced a cap on their SALT deductions prior to the TCJA because the AMT limited their SALT deduction at a lower level than most realize.
- As a result, combining the TCJA’s higher AMT threshold and a more generous SALT cap could allow itemizers in high-tax states to deduct more SALT than they ever could.
- The vast majority of taxpayers in high-tax states pay lower taxes under the TCJA – considering the totality of the TCJA changes – than without the TCJA. For “typical” households, this flips at around $1 million of income and above.
