The One Big Beautiful Bill is rewriting the rules for state and local tax (SALT) planning — and it’s a big deal. With a higher SALT deduction cap, income-based phaseouts, and state-by-state conformity issues, this legislation introduces both opportunity and complexity for tax professionals.

Here’s what you need to know - and how to stay ahead.

Key Changes to SALT Under the OBBB

Higher Deduction Cap:
The SALT cap increases to $40,000 in 2025, with a 1% annual increase through 2029. It reverts back to $10,000 in 2030.

1. Income-Based Phaseouts:
   Begins phasing out for those with MAGI over $500,000 (rising annually), reducing the deduction by 30% of the excess income. A $10,000 minimum deduction remains in place.

2. Effective Date:
   Applies to tax years starting after Dec. 31, 2024.

3. TCJA Provisions Made Permanent:
   The bill locks in key TCJA provisions, adds a $2,200 per-child credit, a $25,000 deduction for tip income, and expands charitable deductions for both itemizers and non-itemizers.

State Conformity: A Moving Target

States respond to federal tax changes in very different ways — some conform automatically, others only through new legislation, and some only partially conform. This creates a complex web of rules that require tax pros to stay nimble.

Political shifts can quickly change how states adopt or decouple from SALT-related provisions, sometimes even retroactively, requiring amended returns or updated strategies.

PTET Still in Play

The final OBBBA preserves federal deductibility for Pass-Through Entity Tax (PTET), which helps business owners bypass the SALT cap at the individual level. Early drafts threatened this benefit for SSTBs, but those restrictions were dropped in the final law.

However, PTET rules vary widely by state and continue to evolve. Annual elections and close monitoring are crucial for maintaining tax efficiency.

Strategic Implications for Tax Professionals

With a temporary window before the cap reverts and SALT rules in flux, now’s the time to take a proactive, strategic approach.

Scenario Planning

Use tax software like GoSystem Tax or UltraTax CS to model various outcomes, apply PTET deductions, and analyze phaseout impacts based on client income.

Client Communication

Keep clients informed and confident. Tools like CoCounsel Tax provide AI-powered summaries and real-time updates, helping you explain complex tax shifts clearly.

Expanded Advisory Services

Advising on PTET elections, residency changes, or entity restructuring positions you as a strategic partner, not just a preparer. Tailored planning around income timing, structure, or state presence can unlock major savings.

Technology as a Force Multiplier

To keep up with rapid changes, your team needs real-time, explainable, and jurisdiction-specific guidance. CoCounsel Tax delivers just that, ensuring your firm remains agile and accurate.

Stay ahead. Be strategic. Use the right tools.

The OBBBA transforms SALT into a planning priority, not just a deduction limit. With careful scenario modeling, thoughtful client communication, and technology-driven insights, tax professionals can turn this legislative change into a competitive edge.