Post OBBB SALT Increase, Planning Options Remain Necessary for High-Income Clients

Although the OBBB increased the SALT cap from $10,000 to $40,000, the law also contains a phaseout for high-income clients. For many, that means they will not see any real increase in their available SALT deduction. Clients who are able may wish to engage in tax minimization strategies to reduce taxable income while the phaseout is in place (remembering that the OBBB provision is temporary and will expire after 2029. Clients with modified adjusted gross income (MAGI) of between $500,000 and $600,000 should be advised about the significant benefits of adopting strategies to keep income below the phaseout zone. Higher income clients may wish to explore opportunities to minimize taxable income through expanded pre-tax retirement plan contributions, ensuring that HSA contributions are maximized and fully participating in any available nonqualified deferred compensation plan options. Once a taxpayer's MAGI reaches $600,000, the SALT deduction is reduced by $30,000. For more information on the SALT cap, visit Tax Facts Online. Read More: Link to Q731.