SALT Just Got Bigger. But That’s Not the Real Story.
For years, high-income earners have felt the squeeze of the $10,000 (State and local tax) SALT deduction cap.
Now, under the OBBBA, the cap is increasing to $40,000 starting in 2026 (with inflation adjustments).
On the surface, that sounds like relief.
But here’s what most people are missing:
The increase is temporary.
And for taxpayers with MAGI over $500,000, the benefit phases down.
The real strategic opportunity isn’t the headline.
It’s what didn’t change.
The Quiet Power Move: PTET Survives
Congress debated limiting or eliminating the pass-through entity tax (PTET) workaround.
They didn’t.
That means business owners operating through partnerships and S corporations in PTET states can still deduct state taxes at the entity level effectively bypassing the individual SALT cap.
For many high-income business owners, this remains one of the most powerful state tax planning tools available.
And unlike the new SALT cap, PTET doesn’t sunset in 2030.
Why This Matters Now - Not in 2026
Too many business owners treat tax law changes as informational updates.
They’re not.
They’re positioning signals.
The SALT cap increase:
• Is temporary
• Phases down for higher earners
• Reverts to $10,000 after 2030
PTET:
• Remains intact
• Requires elections and coordination
• Must align with estimated payments and entity structure
This is not a filing-season decision.
This is a structural decision.
The Wrong Question
Most people are asking:
“Does the new SALT cap help me?”
The better question is:
“How should my entity, income timing, and PTET elections be positioned before 2026?”
That shift from reaction to proactive modeling is where real savings happen.
The Bottom Line
Yes, the SALT cap is increasing.
But if you’re a high-income business owner, the real opportunity isn’t the headline — it’s how you coordinate SALT and PTET strategically.
Temporary relief without planning is just noise.
Strategic positioning is what protects outcomes.
If you’re operating a flow-through entity or earning above the $500,000 threshold, this is a planning conversation worth having now - not after the rules sunset.
