What are the 2025 adjusted gross income thresholds for itemized deduction phaseouts?
Executive summary
The One Big Beautiful Bill Act (OBBBA) changed itemized-deduction rules for 2025: the SALT cap was raised to $40,000 (single and joint) with an income-based phaseout that begins at $500,000 of MAGI and reduces the extra benefit until the floor of $10,000 is effectively restored at about $600,000 (figures and mechanics reported across tax firms and news outlets) [1] [2] [3]. Multiple sources describe the phaseout as a 30% reduction of the excess over $500,000 (or a $50 reduction per $1,000 in one summary), and several commentators warn the phaseout can eliminate the SALT increase for taxpayers with MAGI near $600,000 [1] [4] [5].
1. What threshold triggers the 2025 itemized-deduction (SALT) phaseout — the plain fact
For 2025 the elevated state-and-local-tax (SALT) cap (raised from $10,000 to $40,000) begins to be reduced once modified adjusted gross income (MAGI) exceeds $500,000 for single and married-filing-joint taxpayers (with a $250,000 trigger for married filing separately in several professional summaries) [1] [5] [2].
2. How steep is the phaseout — competing descriptions from reporting and firms
Multiple explainers converge on the same practical result but use different formulas: several sources say the additional SALT benefit is reduced by 30% of the MAGI amount above $500,000 (so a $50,000 excess reduces the benefit by 0.30 × $50,000 = $15,000) and that the benefit is fully whittled back to the $10,000 floor around $600,000 MAGI [5] [2] [4]. One vendor summarized the rule as a $50 reduction per $1,000 over $500,000 for the $40,000 cap — which is arithmetically consistent with a 5% or $50/$1,000 description in that vendor’s framing — but the more common, widely cited operational rule in tax-practice coverage is the 30% reduction of the excess [1] [4] [5].
3. The bottom-line thresholds to watch — quick reference numbers
- Phaseout start (MAGI): $500,000 (Single and MFJ) and $250,000 (MFS) [1] [5].
- Rough full phaseout point: about $600,000 MAGI (at which the SALT benefit is reduced back toward the $10,000 floor) [5] [4] [2].
- SALT cap for 2025 before phaseout: $40,000 (single and joint); $20,000 for MFS in some summaries; reverts toward $10,000 once phaseout is applied [1] [5] [2].
4. Practical impact and the “SALT torpedo” warning
Tax-planning commentary warns that realizing capital gains, doing large Roth conversions, or otherwise pushing MAGI above $500,000 can sharply reduce or eliminate the 2025 SALT benefit — a so-called “SALT torpedo” — meaning taxpayers near the threshold must weigh timing decisions carefully [4] [2] [6]. Morningstar and other advisers emphasize that at $600,000 MAGI the temporary SALT increase can be effectively gone for many filers [7] [4].
5. Where sources disagree or leave gaps — method and language
Sources agree on the thresholds ($500k start, ~$600k end) and the $40,000 cap but differ in language and formula presentation: some characterize the reduction as “30% of excess MAGI” (common among accounting firms and H.R. summaries) while another excerpt used a $50-per-$1,000 reduction phrase that can be misread without the full algebraic context [5] [1] [4]. Available sources do not mention a single IRS-published table showing the exact step-by-step worksheet taxpayers must use; reporting relies on legislative summaries and practitioner interpretation (not found in current reporting).
6. Broader itemized-deduction changes you should know
Beyond SALT, OBBBA also reinstated or altered several itemized-deduction mechanics for 2025: the Pease-style overall limitation on itemized deductions remains suspended for 2018–2025 in some official summaries but OBBBA introduced new targeted limitations and haircuts for very high incomes starting later — commentators flag additional caps or haircuts for top-bracket taxpayers in 2026 and beyond [7] [3] [8]. Analysts differ on permanence: many provisions are temporary or indexed yearly and will be revisited in subsequent tax-years reporting [3] [7].
7. What you should do next — planning posture
Tax advisers in the coverage recommend that taxpayers with MAGI near $500,000–$600,000 model outcomes before crystallizing large income events in 2025; several professional firms published examples showing how the 30% phaseout math reduces the SALT bite and when it returns to $10,000 [5] [2] [4]. Available sources do not provide individualized tax advice or exhaustive worksheets — consult a tax professional and IRS guidance for filing specifics (not found in current reporting).