What’s SALT, and Could You Benefit From the OBBB’s New $40K Deduction?

Come tax time, many Americans would rather put their 1040 in more skilled hands. But the freshly signed Republican tax and budget bill might offer a reason for some higher-earning (or higher-spending) folks a reason to perk up.

That’s because a beefier deduction in the “One Big, Beautiful Bill” could offer Americans a chance to save big money on their taxes — well beyond the $15.75K standard deduction. The source of savings? A higher State and Local Tax (SALT) deduction.

• The OBBB raised the SALT deduction from $10K to $40K for the five years starting in tax year 2026, a move that will benefit higher-income Americans in high-tax states.
• The updated cap means Americans can deduct up to $40K in either state and local income tax or sales tax, whichever is greater.

To itemize or standardize? For years, taking the standard deduction has been more compelling, in part because the 2017 Republican tax bill did away with many deductions which increased the value of itemizing. But for those paying more than $15K annually in state and local income or sales taxes, itemizing could now pay off — if you’re willing to put in the legwork to track it. At the least, it might be a conversation for your accountant.