A new, higher state and local tax (SALT) cap went into effect for 2025. The deduction is now set at $40,000 for married couples filing jointly, with an income-based phase-out, opening a valuable but time‑limited planning window for many Texas pass‑through business owners. 

If you’re a Texas business and homeowner, you’re well aware that the $10,000 SALT cap under the Tax Cuts and Jobs Act from 2018–2025 could easily be surpassed by individual property taxes and elected sales tax alone. For those who live in states with a state-level income tax, the threshold was even easier to reach. But the One Big Beautiful Bill Act (OBBBA) substantially changed the SALT rules beginning in 2025.

This SALT cap increase comes with the following guiderails (for married filing jointly):

• Once modified AGI exceeds $500,000 (for 2025), the $40,000 cap phases down by 30% of income above that threshold, but never below $10,000.
• The cap is indexed up by about 1% per year through 2029 (e.g., $40,400 for 2026).
• In 2030, it’s scheduled to fall back to $10,000 unless Congress acts.
• You must itemize to claim the deduction. 

That last point is critical.

If you’re like many Texas business owners and homeowners, you were previously stuck just below the point where itemizing made the most sense. That could have now changed, particularly if:

• Your combined mortgage interest, charitable gifts, and SALT will now exceed the standard deduction.
• Your county and school district property taxes are high.
• You face significant property taxes on investments and real estate.
• Your sales/use tax outlays for personal purchases are high (including for vehicles, home improvements, and large durable goods).
• You have multistate pass-through income. 

For Texas pass‑through owners, the impact goes beyond your Form 1040.

A higher individual SALT cap can change how attractive certain entity‑level strategies are, especially if you operate in or own property in multiple states. In some cases, it may make sense to rely more on the individual‑level deduction; in others, a mix of entity‑level tax elections in high‑tax states and maximizing your personal SALT deduction produces the best overall result. The key is coordinating your business and personal planning, rather than viewing them as separate decisions.

Before finalizing your taxes this year, ask your tax advisor how the new SALT cap may affect you and if itemizing to take advantage of the deduction could benefit you. You may find that certain tax strategies could really pay off, like bunching charitable giving or large taxable purchases into specific years and itemizing in those years. If you own a pass-through business, such as a partnership or S Corp, find out how the new SALT cap affects your business versus individual tax strategies, particularly as they relate to the jurisdictions in which you live, own, and operate. 

You’ll want to work alongside your tax advisor to:

• Estimate your 2025–2029 SALT totals (property, sales/use, and any out‑of‑state income tax), and see how close you are to the new, higher cap. 
• Project your AGI to determine whether the phase‑out will affect you and whether income‑shifting, deduction bunching, or timing strategies make sense.
• Revisit whether and when you itemize versus take the standard deduction in those years.
• If you have multistate pass‑through income, model PTET elections and traditional SALT deductions side by side; the optimal mix may change under the new cap.
• Coordinate property tax payment timing, large taxable purchases, and charitable giving while the higher SALT cap is available from 2025–2029.

Because the rules are complex and the expanded SALT cap is potentially temporary, a year‑by‑year projection tailored to your entities, ownership structure, and multistate footprint is essential. 

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