SALT Deduction Expansion: How the OBBB Impacts High Income Earners in 2025 - EP. 187

Summary 

This episode explores the newly expanded SALT (State and Local Tax) deduction under the One Big Beautiful Bill Act (OBBB), focusing on its impact for high-income earners and residents of high-tax states. 

Key Points Covered 

SALT Deduction Expansion: 

• The cap on SALT deductions jumps from $10,000 to $40,000, a major relief for households earning under $500,000. 
• This change is especially beneficial for taxpayers in high-tax states like New York, California, Connecticut, Illinois, Massachusetts, Maryland, and the District of Columbia. 

Contrast with Social Security Tax Deduction: 

• The episode compares the substantial SALT deduction expansion to the more modest senior tax deduction discussed in previous episodes. 
• Raises questions about fairness, fiscal responsibility, and political priorities. 

Personal Perspective: 

• Travis shares insights from living in both New York (high-tax) and Tennessee (low-tax), illustrating how these policies affect different regions and income brackets. 

Tax Reform Details: 

• Travis explains how the 2017 Tax Cuts and Jobs Act raised the standard deduction and lowered tax brackets, but capped SALT deductions at $10,000, which hurt high-tax state residents. 
• The OBBB’s increase to $40,000 allows more people in high-tax states to itemize deductions, potentially saving substantial federal taxes. 

Who Benefits Most: 

• Estimated 10–15 million households could benefit, with an average household tax savings of $4,800. 
• The total cost is projected at $72 billion per year, more than double the estimated $30 billion cost of the senior tax deduction. 

Political and Fiscal Implications: 

• The episode discusses how the expanded SALT deduction disproportionately benefits higher earners in blue states, potentially incentivizing fiscal irresponsibility at the state level. 
• Highlights the political divide and debates over who should benefit from tax reform and how it affects the federal deficit. 

Critical Reflection: 

• Points out the hypocrisy in political arguments about tax breaks and deficit concerns, noting that those who criticize the senior deduction often benefit most from the SALT expansion. 
• Suggests that voters in high-tax states should push for more fiscal responsibility at the state level. 

Takeaways 

• The OBBB’s SALT deduction expansion is a significant win for high-income earners in high-tax states, but raises broader questions about fairness and fiscal policy. 
• Travis encourages listeners to consider the real beneficiaries of tax reform and the long-term impact on state and federal budgets. 

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About Your Host:

Travis Maus has been in financial services for over fifteen years. He is a Senior Wealth Manager and Chief Executive Officer at