New SALT Limit

[Snaggletooth]

I hesitate to post anything about pending legislation until it becomes law. But I understand the "Big Beautiful" Bill has passed both chambers, and the SALT limit has been increased to $40,000.

Is this for real?

[FEDUKE404]

i think that the SALT limit, as well as the "no tax on Soc Sec," come with many strings attached for higher income individuals.
At this stage I'm not overly concerned with the fine print. It is likely TTB will post a nice summary of the BBB changes.
And thank goodness for computers! !

FE

[kathyc2]

SALT max is 40K with phaseout starting at 500K

Additional 6K for 65 or older phaseout 75/150

Tips 25K max deduction phaseout 150/300

Overtime premium max 12.5K (25K for MFJ) phaseout 150/300

Over 65, tips and OT are after AGI deductions. In other words, they do not decrease AGI.

[Lion]

Anyone have a short answer to what the increased SALT limit does to PTET for our partners and shareholders whose partnerships and S-corporations already made 2 ES payments to states? (I have live CE booked for September, October, December 2025, and January 2026; and will certainly add a few webinars, too.)

[kathyc2]

Anyone have a short answer to what the increased SALT limit does to PTET for our partners and shareholders whose partnerships and S-corporations already made 2 ES payments to states? (I have live CE booked for September, October, December 2025, and January 2026; and will certainly add a few webinars, too.)

"The adopted version of the bill merely increases the SALT cap and does not attempt to limit or address the various workarounds that taxpayers are currently using to avoid the SALT cap. The AICPA had advocated against limiting the use of PTETs."

https://www.thetaxadviser.com/news/2025/jun/details-of-tax-changes-in-senate-reconciliation-bill/

[New York Enrolled Agent]

SALT max is 40K with phaseout starting at



Overtime premium max 12.5K (25K for MFJ) phaseout 150/300

.

Kathy - what’s your take on OT?

Example - regular pay equals $20/hour; overtime pay(time and a half) equals $30 per hour. TP works 5 hours OT.
is the deduction all $150 or only $50 excess over regular pay?

[Snaggletooth]

WOW - I smell "technical corrections" as well as IRS rulings and regs from the IRS that have the force of law...

[Anarchrist]

is the deduction all $150 or only $50 excess over regular pay?

only the $50

[kathyc2]

Kathy - what’s your take on OT?

Example - regular pay equals $20/hour; overtime pay(time and a half) equals $30 per hour. TP works 5 hours OT.
is the deduction all $150 or only $50 excess over regular pay?

Only the premium of 50.

(1) IN GENERAL.—For purposes of this section, the term ‘qualified overtime compensation’ means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in such section) at which such individual is employed.

[kathyc2]

Kathy - what’s your take on OT?

Can you make any sense of the charitable changes? .5 floor? I can't make heads or tails out of it.

I have a client that I've finally convinced to set up a DAF with appreciated mutual funds and want to make sure there aren't changes to it?????

[kathyc2]

Can you make any sense of the charitable changes? .5 floor? I can't make heads or tails out of it.

Think I figured it out. The donation equal to .5% of AGI is not deductible on A. If AGI is 100,000 and make 10,000 donation, only 9,500 is deductible. How stupid is that!

[rbynaker]

Think I figured it out. The donation equal to .5% of AGI is not deductible on A. If AGI is 100,000 and make 10,000 donation, only 9,500 is deductible. How stupid is that!

Yeah, this is one that doesn't kick in until 2026 so there's time for public outcry to get it repealed.

[kathyc2]

Yeah, this is one that doesn't kick in until 2026 so there's time for public outcry to get it repealed.

Thank goodness for small favors?

Are you reading the auto interest the same as me? Say client bought a car prior to 1/1/25 that has final assembly in US. Current balance is 20K. They can refinance the 20K and take interest deduction from the refi date forward?

I envision shady companies taking advantage of people without financial sense. They hear tax deduction and don't bother to calculate if they are paying more overall.

[New York Enrolled Agent]

Yeah, this is one that doesn't kick in until 2026 so there's time for public outcry to get it repealed.

Rick - this cut doesn’t interfere with the non-itemizer charitable deduction- is that correct?

[New York Enrolled Agent]

Are you reading the auto interest the same as me? Say client bought a car prior to 1/1/25 that has final assembly in US. Current balance is 20K. They can refinance the 20K and take interest deduction from the refi date forward?

I envision shady companies taking advantage of people without financial sense. They hear tax deduction and don't bother to calculate if they are paying more overall.

I think the qualified auto interest can only be deductible on a auto purchase after 12/31/2024. If the TP refinances I think the provision doesn't allow any extra funds to be taken out for deduction purposes. Sounds similar to the refinancing of existing mortgage acquisition interest.