William F. Davis, CFP® | Vericrest Private Wealth
For eight tax seasons, checking the box for the standard deduction without running any numbers was a perfectly reasonable move, even for clients doing quite well for themselves. The 2017 tax law capped state and local tax deductions at $10,000, which meant that for most people, property taxes alone used up the whole cap before you even got to state income tax, mortgage interest, or a single charitable gift. Itemizing stopped being worth the paperwork.
That math changed last year, and a lot of financial habits haven’t caught up to it yet.
What Actually Changed
The One Big Beautiful Bill Act raised the SALT deduction cap from $10,000 to $40,000 starting in 2025, with a 1% increase each year through 2029. For 2026, that puts the cap at $40,400. In 2030, absent further legislation, it reverts back to $10,000.
So this is a four-year window, not a permanent fix. If you’ve been paying attention to how Congress handles anything with an expiration date, that should not fill you with confidence that 2030 will sort itself out on schedule either way. Plan for the window you actually have.
A Hill, Not a Cliff
If you’ve read anything we’ve written about Medicare premiums, you know we like to point out when a tax provision behaves like a cliff: cross a line by a dollar and the whole result changes. This one doesn’t work that way, and it’s worth knowing the difference.
The higher cap phases down gradually for high earners. For 2026, it starts reducing once modified adjusted gross income clears roughly $505,000, shrinking by about 30 cents for every dollar above that line, until it settles back at the $10,000 floor around $605,000 of MAGI. Above that level, you’re effectively back under the old cap. The expansion was never really built for the highest earners in the first place. It’s aimed squarely at the range in between: households with real property tax and state income tax bills, but not so much income that the benefit phases itself back out.
The chart below shows exactly what that slope looks like:
So, Are More People Actually Itemizing Again?
Fair question, and one worth answering plainly: before 2018, roughly 30% of filers itemized. Once the $10,000 cap took hold, that share fell to somewhere around 10%. Nobody has published an official, filing-season-confirmed number for 2026 yet since the returns reporting this cap haven’t been filed. But directionally, a cap four times larger points the same math back in the other direction for a meaningful slice of taxpayers, particularly anyone carrying a mortgage on top of a real property tax bill.
Here’s what that looks like in practice. A married couple with $18,000 in property taxes and $15,000 in state income tax was stuck at a $10,000 SALT deduction under the old rules, often not enough, combined with mortgage interest, to clear the standard deduction, which sits at $32,200 for joint filers in 2026. Under the new cap, that same couple can deduct the full $33,000 in state and local taxes, which by itself gets them most of the way past standard before mortgage interest or a single charitable dollar even enters the picture.
Why This Is a Q4 2026 Question, Not an April One
Once the calendar flips to Q4, a few of the levers that determine which side of this line you land on only work between now and December 31. That makes this a right-now question, not something to revisit once the return is already in front of you:
Property tax and state estimated payments. If your total state and local taxes for the year fall under the new cap, paying a December installment instead of waiting until January can pull the deduction into the year that actually benefits from it.
Income timing near the phase-down zone. If your income is anywhere near that $505,000 to $605,000 range, an extra bonus, a large RSU vest, or a Roth conversion this year doesn’t just add income. It can quietly shrink your SALT deduction on the way up. That’s one more reason MAGI is worth watching for something other than Medicare premiums.
The PTET election, if you own a business. Many states let an S-corp or partnership pay state tax at the entity level instead of the personal level, which sidesteps the personal SALT cap altogether. For business owners, that’s often a bigger lever than anything on the personal return, and a separate conversation worth having on its own.
Charitable bunching still matters here too, layered on top of a larger SALT deduction rather than replacing it. More on that in a piece we have coming.
What Actually Helps
Recompute itemized versus standard for 2026 using your real property tax and state withholding numbers, not the assumption you’ve been running on since 2018.
Check where your MAGI sits relative to the $505,000 phase-down threshold before agreeing to any last-minute income this year.
Time property tax and state estimated payments around December 31 if doing so moves you across the standard deduction line.
If you run a pass-through business, ask whether your state’s PTET election beats relying on the personal SALT cap entirely.
Build the plan assuming this doesn’t last past 2029, because as written, it doesn’t.
Why Now
Most of the decisions in this piece, how much state tax you prepay, how much income you accelerate or defer, whether a Roth conversion makes sense this year, only work while there’s still time left in the calendar year to act on them. If you haven’t run the actual itemized-versus-standard math since the rules changed, now is the year to do it before the return is filed, not after.
If you’re not sure which side of the line you’re on, let’s look at it together while there’s still time to do something about it.
#TaxPlanning #YearEndPlanning #SALTDeduction #WealthManagement #FinancialPlanning #HighNetWorth
William F. Davis is a CERTIFIED FINANCIAL PLANNER™ and Managing Partner with Vericrest Private Wealth LLC, a financial advisory firm in Newtown, Pennsylvania.
Vericrest Private Wealth LLC (“Vericrest”) is an SEC registered investment advisory firm. The information provided herein should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or investment advisory service. Past performance is no guarantee of future results, and there is no guarantee that future investments will be profitable. While we believe that third party information provided is accurate, Vericrest does not guarantee or otherwise warrant such information. For more information please contact Vericrest or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov) to review important disclo
