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The recently enacted tax law significantly increases the state and local tax (SALT) deduction cap from $10,000 to $40,000 by 2025, with annual adjustments thereafter. This primarily benefits high-income taxpayers ($500,000 MAGI or less) in high-tax states who itemize deductions. Those with higher incomes face reduced deductions, while those who don't itemize will see benefits from increased standard deductions. The law also maintains state workarounds for pass-through entities, preserving tax advantages for partners and shareholders.

Prepared by Christopher Adams and reviewed by editorial team.