Key Takeaways
- The SALT deduction cap rose substantially under the 2025 tax law, with a phase-down at high incomes, making itemizing viable again for many homeowners in high-tax states.
- You take the larger of the standard deduction or your itemized total; the game is concentrating deductions into alternating years.
- Charitable bunching through a donor-advised fund is the easiest lever most high earners have.
Every filer takes the larger of the standard deduction or the sum of itemized deductions: state and local taxes up to a cap, mortgage interest, charitable gifts, and a few others. The 2025 tax law changed the arithmetic by raising the state and local tax (SALT) cap from $10,000 to a much higher level, $40,000 to start, with a phase-down for very high incomes, while keeping standard deductions large.
The result: households that spent years defaulting to the standard deduction should re-run the math for 2026, because itemizing, or alternating between the two, may now win. Verify current figures at irs.gov, since several provisions phase and adjust over time.
The New SALT Math
Under the higher cap, a Georgia household paying $15,000 of state income tax and $8,000 of property tax can now deduct all $23,000 of it, where the old cap stopped at $10,000. Stack mortgage interest on a sizable loan and charitable giving, and itemized totals clear the standard deduction with room to spare. High earners should note the phase-down: above certain income levels the enhanced cap shrinks back toward $10,000, which makes income timing and the cap interact in planning.
Bunching: the Alternating-year Strategy
If your itemized total hovers near the standard deduction, alternate. Concentrate two or three years of charitable gifts into one year, often via a donor-advised fund that lets you take the deduction now and grant to charities over time, and in some cases prepay a property tax installment. In the "on" year you itemize a big number; in the "off" years you take the full standard deduction. Same lifetime giving, materially lower lifetime tax.
Donating appreciated stock instead of cash compounds the benefit: full fair-value deduction, and the embedded capital gain vanishes.
Try it: the free The Wealth Checkup takes a couple of minutes and shows you where you stand. Or explore tax planning at Attend.
Mortgage Interest and the Rest
Mortgage interest remains deductible on up to $750,000 of acquisition debt for loans taken after 2017. Medical expenses count only above a high income floor, relevant mainly in heavy-care years. Miscellaneous deductions remain mostly gone. For business owners, the cleanest SALT play remains the pass-through entity tax election many states offer, which shifts state tax to the entity where it stays fully deductible; if that applies to you, it can beat every personal-level strategy on this page.
Deciding, Year by Year
This is an annual decision made in the fall, not at filing. Project your deductions by November, compare against the standard deduction, and pull the levers, gift timing, property tax timing, income timing near the phase-down, while they still work, as covered in our year-end checklist.
We run this projection for clients as part of tax planning, alongside the withholding and estimated-payment checkup.
Frequently Asked Questions
Is the higher SALT cap permanent?
No. The enhanced cap is scheduled to run for several years and then revert, and it phases down at high incomes during that window. Treat it as a planning window rather than a permanent feature.
What is a donor-advised fund in one sentence?
An account you fund with cash or appreciated assets, taking the full charitable deduction immediately, from which you recommend grants to charities on your own schedule.
Does Georgia offer a pass-through entity tax election?
Yes, Georgia is among the states offering a PTET election that lets pass-through businesses pay state tax at the entity level. Whether it helps depends on your entity and income mix; coordinate with your CPA.
Tony leads Attend Wealth, a fee-based wealth management firm in Atlanta serving professionals, families, and business owners. Advisory services are held to a fiduciary standard. More about Attend
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