As part of our ongoing commitment to keeping our clients informed about changes in federal tax law that may impact your financial planning and tax resolution strategies, we want to bring your attention to a significant piece of tax legislation that recently advanced in Congress.

The U.S. House of Representatives has passed a new tax bill with several important provisions that could affect both individual taxpayers and small business owners—especially those living in states with higher tax burdens. One of the most notable proposed changes is an increase to the State and Local Tax (SALT) deduction cap.

What’s Changing with the SALT Deduction?

Under current tax law, the SALT deduction is capped at $10,000. However, the new bill proposes raising that limit significantly:

• Beginning in 2025, the cap would increase to $40,000 for most taxpayers (or $20,000 for individuals filing as married but separate).
• This higher deduction would gradually phase out for households with a modified adjusted gross income (MAGI) exceeding $500,000 (or $250,000 MFS).
• Both the cap and the income threshold for phaseout would rise by 1% each year from 2026 through 2033.

This potential change could offer meaningful tax relief for many of our clients—particularly those in high-tax states—who have been limited by the current SALT cap.

Other Key Provisions That May Affect You

While the SALT cap increase is drawing headlines, the bill includes a variety of other tax changes that may impact your situation:

• Standard Deduction: The current deduction would be made permanent, with a temporary boost in the amount.
• Child Tax Credit: Temporarily increased to $2,500 per child.
• Tips Deduction: A temporary deduction would be introduced for qualified tip income.
• Estate & Gift Tax: The exemption threshold would be permanently raised and indexed for inflation.
• Energy Tax Credits: Most of the clean energy incentives enacted under the Inflation Reduction Act would be eliminated.
• Car Loan Interest: A temporary deduction for car loan interest would become available.
• Senior Benefits: Taxpayers aged 65 and older may see an additional $4,000 standard deduction.
• Children’s Savings Accounts: Permanent authorization of “Trump accounts” for child savings.
• Itemized Deduction Limits: New rules would reduce itemized deductions by 2% for each dollar earned above the 37% tax bracket threshold.

What Comes Next?

Although this bill has passed in the House, it still requires Senate approval and must be signed by the President before it becomes law. Debate and amendments are expected in the Senate, especially as some of the proposed measures face opposition.

How This Affects You

If you’re already working with us to resolve a tax issue—or you’re concerned about how future tax law may impact your liabilities—now is the time to take proactive steps. Changes in deduction limits, credits, and thresholds can have a real effect on your tax burden, and we’re here to help you make the most of every opportunity for relief and compliance.

Our team is closely monitoring these developments. As always, we’ll keep you updated with clear, actionable information as the legislation progresses.

Need personalized guidance? Don’t hesitate to contact us for a consultation. We’re here to help you navigate the complexities of federal tax law with confidence.