SALT Fairness for Working Families Act Proposes $5,000 Increase to State and Local Tax Deduction Starting in 2025

The SALT Fairness for Working Families Act aims to put more money back in your pocket by raising the federal deduction cap for state and local taxes (SALT). Under Section 2, the bill increases the current $10,000 limit to $15,000 for individuals, effective for tax years beginning after December 31, 2024. By amending Section 164(b)(6)(B) of the Internal Revenue Code, the legislation specifically targets the 'SALT cap' that has limited how much taxpayers can write off for the property, income, or sales taxes they already paid to their home states and cities.

More Room to Deduct

If you live in a state with higher property taxes or a robust state income tax, you’ve likely hit the $10,000 'ceiling' quickly. For example, a married couple in a suburban area paying $8,000 in property taxes and $6,000 in state income taxes currently loses out on $4,000 of potential deductions because of the existing cap. This bill moves that ceiling up to $15,000, allowing that same couple to deduct their entire $14,000 tax bill from their federal taxable income. It’s a straightforward adjustment designed to prevent 'double taxation' on a larger portion of your earnings.

The 2025 Timeline

Because the change applies to taxable years starting after December 31, 2024, you won't see this reflected on the tax return you file this coming spring. Instead, the impact would hit during the 2025 tax year. For a middle-class professional or a trade worker owning a home in a high-tax municipality, this $5,000 bump in the deduction limit could lead to a lower overall federal tax bill when filing in 2026. The bill is precise and narrow, focusing entirely on this specific dollar threshold without changing other complex filing requirements.