CTCPA Reacts as House Passes Tax Bill Capping 'SALT' Deduction at $40,000 with Phase Out Over $500,000

The U.S. House of Representatives passed changes for the federal deduction for state and local taxes (SALT) on Thursday, May 22 as part of President Trump’s tax package.

Originally enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA), there is currently a $10,000 limit on the SALT deduction. Under the House provision that would take effect in 2025, the SALT cap would rise to $40,000 and phase out for individuals with income over $250,000 and couples over $500,000. Both the SALT cap and the income phaseout would increase by 1% annually from 2026 through 2033.

“Increasing the SALT cap has long been a priority for Connecticut lawmakers and residents because it disproportionally affects taxpayers in high-tax states like ours,” explained Connecticut Society of CPAs (CTCPA) Executive Director and CEO Bonnie Stewart. “The current $10,000 SALT cap limits how much households can deduct on their federal taxes, leading to higher overall tax burdens for individuals living in higher-cost areas.”

“Connecticut consistently ranks among the states with the highest average SALT deductions,” said Alan Clavette, CPA, Managing Member of Clavette & Company, LLC in Newtown and Chair of the CTCPA State Taxation Committee. “Increasing the cap would provide relief for many Connecticut homeowners and other taxpayers by allowing them to deduct more of their state and local taxes on their federal returns.”

The bill is expected to be modified as it moves through the Senate in the next step of the legislative process.  

With a membership of more than 6,000 in public practice, business and industry, government, and education, the CTCPA’s mission is to advocate on behalf of the accounting profession, foster a professional community, and provide high-quality professional development opportunities.

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