US EditionWhen Key Provisions in Trump’s ‘Big, Beautiful Bill’ Take Effect
DISTRICT OF COLUMBIA, UNITED STATES, JUL 12 – The bill raises the SALT deduction cap to $40,000 starting in 2025 with a phaseout for incomes over $500,000, potentially causing a 45.5% federal tax rate on earnings within that range.
- Earlier this month, President Donald Trump's bill proposes raising the SALT deduction cap to $40,000 in 2025 with a 1% annual increase, potentially causing a 45.5% tax rate dubbed a 'SALT torpedo' for high earners.
- Following the proposal, the SALT cap phases out between $500,000 and $600,000 MAGI, dropping from $40,000 to $10,000, creating a potential tax increase for high earners.
- According to tax experts, earning an extra $100,000 can reduce SALT benefits by $30,000 at a 30% phaseout, raising taxable income and effective tax rates, experts say.
- The phaseout could cause high-income taxpayers earning $500,000–$600,000 to face an effective tax rate of up to 45.5%, experts say.
- In response to the SALT deduction phaseout, tax advisors suggest running MAGI projections and reconsidering Roth conversions to mitigate high effective tax rates for earners between $500,000 and $600,000.
40 Articles
40 Articles
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When key provisions in Trump’s ‘big, beautiful bill’ take effect
By Tami Luhby and Annette Choi, CNN President Donald Trump signed his landmark tax and spending cuts bill into law on July 4, notching the first major legislative achievement of his second term. Congressional Republicans approved the president’s sweeping agenda bill on an ambitious timeline over the blanket opposition of Democrats, as well as some consternation within the GOP over its impact to the federal deficit and certain government programs…
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