What Is the SALT Deduction Cap and Why Does It Matter for Asheville Retirees?
The One Big Beautiful Bill Act (OBBB) made one key update that could significantly benefit North Carolina homeowners: the State and Local Tax (SALT) deduction cap is increasing from $10,000 to $40,000 beginning in 2025 for households earning under $500,000.
For retirees in and around Asheville, Hendersonville, and the greater Buncombe County area, this change could help preserve thousands of dollars in deductions—and even more importantly, add peace of mind in retirement.
How Does the SALT Deduction Work?
The SALT deduction allows taxpayers to deduct certain state and local taxes, including property and state income taxes, on their federal return. For homeowners in high-property-tax regions of Western North Carolina, this deduction can make a meaningful difference in overall taxable income.
Since 2018, taxpayers could only deduct up to $10,000, leaving many retirees unable to fully offset their tax burden. The new law changes that—at least for the time being.
Raising the Cap (But Not Forever)
Beginning in 2025, the OBBB raises the cap to $40,000 for households with income below $500,000. However, this change is only in effect from 2025 to 2029.
If your income falls between $500,000 and $600,000, the deduction gradually phases out. Households earning above $600,000 remain subject to the old $10,000 limit.
Tax Year | SALT Deduction Cap | Who Qualifies |
2017–2024 | $10,000 | All taxpayers |
2025–2029 | $40,000 | MAGI under $500,000 |
2030+ | $10,000 | Reverts to prior law |
For Asheville-area retirees who still pay substantial property taxes on their homes or mountain properties, this could mean thousands in potential savings—but only if your income and deductions are structured thoughtfully.
What the SALT Deduction Increase Means for Retirees
If you’re retired or approaching retirement, the higher SALT cap could:
- Reduce your federal taxable income, helping your savings last longer.
- Increase after-tax cash flow by allowing you to deduct more of your state and property taxes.
- Open new opportunities for income and tax timing, such as when to take IRA withdrawals or realize investment gains.
Those near the $500,000 threshold should pay close attention to income management strategies to stay eligible for the full deduction.
Why Proactive Tax Planning Matters with the SALT Deduction
Many Asheville homeowners and Western North Carolina retirees pay considerable property taxes, particularly on second homes or large parcels of land. This makes the SALT deduction change a key planning opportunity.
At Infinity Wealth Management, proactive tax planning is a touchstone part of our holistic wealth management strategy. Using the Five Pillars of Holistic Wealth Management, we integrate every aspect of your financial life—financial planning, taxes, investments, protection, and legacy—into a fully customized retirement plan designed to help you reach your goals while reducing lifetime tax exposure, not just this year’s bill.
As Glen Pier, our Founder and Lead Advisor, often says: “Money isn’t the goal—life is. And when all parts of your financial picture are working together, you can truly live a life without limits.”
If you’d like to see how this new law could affect your tax outlook for 2025 and beyond, let’s talk. Reach out to your Infinity advisor or book your complimentary call with us today.
FAQ: 2025 SALT Deduction Questions
What is the new SALT deduction cap for 2025?
The OBBB raises the cap from $10,000 to $40,000 for households earning under $500,000.
How long does the higher deduction last?
The higher SALT deduction lasts from 2025–2029, after which it reverts to $10,000.
Who can benefit most from the higher SALT deduction?
Retirees and homeowners in higher-tax areas like Asheville, Hendersonville, and Black Mountain can benefit from the higher SALT deduction, especially those paying significant property taxes.
What if my income is near $500,000?
The deduction phases out above that amount, but proactive planning can help you stay within range.