The $40K SALT Cap Explained: Why Texas Taxpayers Are Still Taking the Wrong Deduction
After the One Big Beautiful Bill increased the SALT cap to $40,400, many Texas taxpayers should reconsider itemizing. However, defaulting to prior-year assumptions causes high-income filers to miss material federal tax savings.
Why the SALT Cap Increase Changed the Math for Texans
Texas taxpayers historically relied on the standard deduction because SALT was capped at $10,000. The OBBB increased that cap to $40,400, fundamentally altering the itemized vs. standard deduction analysis for high earners.
Yet many CPAs still:
Auto-apply last year’s deduction method
Skip SALT re-modeling
Ignore entity-level SALT strategies
According to experienced tax advisory firms like Lakeline Tax, this single oversight alone can cost high-income Texans tens of thousands annually.
Standard vs. Itemized: What Changed Post-OBBB
| Deduction Category | Standard | Itemized (Post-OBBB) |
|---|---|---|
| SALT | $0 | Up to $40,400 |
| Mortgage Interest | Limited | Included |
| Charitable Giving | Limited | Included |
| Optimization | Low | High |
Lakeline Tax re-runs this analysis every year, not once per filing cycle.
Entity-Level SALT: The Missing Layer
Through Pass-Through Entity (PTE) elections, certain state-level taxes can be deducted at the entity level—bypassing individual SALT limits altogether.
Learn more: Lakeline Tax Planning Services
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OBBB fundamentally reshaped deduction strategy for Texas taxpayers.
If your SALT strategy hasn’t been re-modeled since OBBB, you’re likely overpaying.
Schedule a SALT optimization review: