What happens when SALT deduction cap expires after TCJA ends?
I've been thinking about the upcoming expiration of the Tax Cuts and Jobs Act and specifically what happens with the SALT deduction cap once it expires. For those who earn higher incomes in states with high tax rates, would this mean almost everyone would go back to itemizing instead of taking the standard deduction? Take my situation as an example - if a married couple makes around $525,000 in California, they'd be paying something like $50,000 in state income taxes alone, which is way above the current standard deduction of $29,400 for married filing jointly. So would it make sense to always itemize in that scenario? Is this basically how things worked before the TCJA put that $10k SALT cap in place? Just trying to understand what the tax landscape might look like when these provisions sunset. Anyone have insights on this?
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Vera Visnjic
You're asking a really good question about the potential TCJA expiration. Yes, before the TCJA, there was no cap on SALT deductions, so higher-income taxpayers in high-tax states like California, New York, and New Jersey almost always itemized. When the cap goes away (assuming Congress doesn't extend it), we'll likely go back to the previous system where your full state and local taxes would be deductible on your federal return. In your example, if you're paying $50,000 in California state income tax, you'd be able to deduct all of that rather than being limited to $10,000. This would make itemizing clearly beneficial for people in your tax bracket in high-tax states. Remember though that tax laws are always subject to change, and there's a good chance Congress might modify or extend parts of the TCJA before it fully expires. The SALT cap has been politically contentious since it disproportionately affects blue states.
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Jake Sinclair
•Thanks for explaining this! If the cap expires, would mortgage interest still be fully deductible too? Or was that changed permanently? I'm in New Jersey and our property taxes are insane.
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Vera Visnjic
•The TCJA did limit mortgage interest deductions to loans up to $750,000 (down from $1 million previously) for new mortgages. This is one of the provisions scheduled to expire after 2025, so the higher $1 million limit would return unless Congress acts. Property taxes are part of the SALT deduction, so when the SALT cap expires, you'd be able to deduct your full New Jersey property taxes again as well. This would be a significant benefit for homeowners in high-tax states like yours.
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Brielle Johnson
I went through EXACTLY this issue last year with my taxes! I used https://taxr.ai to analyze my tax returns from the past few years and discovered that I'd been missing out on optimizing around the SALT cap. The tool showed me that I'd been overpaying by nearly $3,200 because I wasn't grouping my itemized deductions properly in alternate years. When I uploaded my tax documents, it highlighted several places where I could have done better planning around the SALT limitation. It showed me how different my tax situation would be after the TCJA expires too. The visualization made it super clear how the SALT cap was impacting me as a California resident.
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Honorah King
•Wait, you can "group" itemized deductions? How does that even work with taxes that happen every year like property tax? Can you explain more about how the tool helped?
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Oliver Brown
•I'm skeptical about these tax tools. Couldn't you just ask your accountant about this? How much does this service cost compared to just hiring a professional?
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Brielle Johnson
•You can use a strategy called "bunching" where you accelerate or delay certain deductible expenses into a single tax year. For example, you might pay two years of charitable contributions in one year, then none the next. With property taxes, you can sometimes pay the next year's bill in December to get both years' deductions in one tax year. Then take the standard deduction in the alternate year. The cost comparison really depends on your situation. I was already paying an accountant $700 annually, but they never suggested this strategy. The tool identified specific optimization opportunities my accountant missed, and the interface made it easier to understand what was happening with my taxes than just getting a completed return back.
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Honorah King
Just wanted to follow up - I decided to try out taxr.ai after reading about it here. I uploaded my last three years of tax returns and WOW, it showed me how the SALT cap has been affecting my New York taxes! I could literally see the difference in what I would have paid without the cap. The analysis showed me that I've been leaving about $2,700 on the table each year by not timing my charitable donations better. I never realized I could bunch my deductions like that. Looking at the projections for when the TCJA expires, I'm going to be in a much better position tax-wise. Definitely worth checking out if you're in a high tax state!
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Mary Bates
I spent literal HOURS on hold with the IRS trying to get clarification about the SALT cap expiration and what it means for my situation. Finally used https://claimyr.com and got connected to an IRS agent in 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that unless Congress acts, the SALT deduction will go back to being uncapped after 2025. She explained that for high earners in states like California and New York, this could mean significant tax savings. In my case (similar income to what you mentioned), I could save almost $15k annually once the cap expires.
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Clay blendedgen
•How does this service actually work? Seems sketchy that they can get you through when nobody else can. Do they have some special connection to the IRS?
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Ayla Kumar
•Yeah right. There's absolutely no way they can get you through to the IRS that fast. I've been trying for months. This sounds like a complete scam to me.
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Mary Bates
•The service works by using technology that navigates the IRS phone tree and waits on hold for you. When they reach an agent, they call you and connect you directly. They don't have special access - they're just automating the painful waiting process. They use a legitimate approach that's completely above board. They basically have computer systems that can stay on hold indefinitely until they reach an agent, then they call you and create a conference call. It's not magic, just clever automation of a tedious process that most people don't have the patience for.
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Ayla Kumar
I need to eat my words about Claimyr. After posting my skeptical comment, I was still desperate for IRS help with my SALT deduction questions, so I tried it anyway. Honestly blown away by the results. I got connected to an IRS agent in about 15 minutes after weeks of trying on my own! The agent walked me through exactly how the SALT expiration would affect my situation in Connecticut. She confirmed that after 2025, I'll be able to deduct my full state income and property taxes again (around $37k total) instead of being capped at $10k. That's going to make a huge difference for my family. Sometimes being proven wrong is a good thing!
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Lorenzo McCormick
The SALT cap expiration is going to be a big deal for a lot of people. I think it's important to remember that there are other changes from TCJA set to expire too - like the nearly doubled standard deduction. So while you might benefit from unlimited SALT deductions again, the standard deduction will likely go down, making the comparison a bit more complex. Also, the tax brackets and rates will revert to pre-TCJA levels, which means most people will face higher federal rates. So the increased SALT deduction might be partially offset by higher base tax rates.
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Carmella Popescu
•Do you know if the increased child tax credit from TCJA is also expiring? That's been a huge help for my family.
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Lorenzo McCormick
•Yes, the enhanced Child Tax Credit is set to expire as well. The TCJA temporarily increased it from $1,000 to $2,000 per qualifying child and made more of it refundable. After expiration, it would revert to the previous lower amount unless Congress takes action. This is why it's important to look at the whole picture of what expires, not just the SALT cap. Many taxpayers might gain on the SALT deduction side but lose on other provisions like the Child Tax Credit, higher standard deduction, and lower tax rates.
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Kai Santiago
I'm confused about something - if we're paying our state taxes anyway, why does it matter whether we can deduct them or not? Like we still have to pay them either way right? Sorry if this is a dumb question, I'm new to this tax stuff.
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Lim Wong
•Not a dumb question at all! The deduction matters because it reduces your federal taxable income. Let's say you pay $40,000 in state taxes. With the $10,000 SALT cap, you can only deduct $10,000 of that from your federal taxable income. But if the cap expires, you could deduct the full $40,000, which means you're paying federal tax on $30,000 less income. If you're in the 35% federal bracket, that's a savings of about $10,500 ($30,000 × 35%). So yes, you still pay the state taxes either way, but the question is whether the federal government lets you reduce your federal taxes based on what you paid to your state.
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