The One Big Beautiful Bill Act (OBBBA) reshapes the federal tax landscape—including key reforms to the State and Local Tax (SALT) deduction cap. In this post, we explore new SALT planning strategies powered by AI tax research tools, AI tax planning tools, and agentic AI in tax workflows. Discover how these updates can help tax professionals optimize deductions and client outcomes. Start planning smarter—read on.
Introduction: Why SALT Planning Matters Again
State and Local Tax (SALT) planning is once again center stage for tax professionals and high-income earners. Since the 2017 Tax Cuts and Jobs Act (TCJA) imposed a $10,000 cap on SALT deductions, taxpayers in high-tax states like California, New York, and New Jersey have struggled to fully deduct their state income and property taxes. The new One Big Beautiful Bill Act (OBBBA)—passed in July 2025—changes that.
For CPAs, enrolled agents, and wealth advisors, this means new planning opportunities—and new urgency to harness AI tax research and planning tools to adapt in real time.
Key SALT Changes Under OBBBA
According to Section 70120 of the OBBBABILLS-119hr1eas (1), the law now:
- Raises the SALT cap significantly for individuals and joint filers.
- Indexes the SALT cap to inflation, beginning in 2026.
- Provides an optional election for small business owners in pass-through entities to deduct SALT at the entity level (similar to PTE-level tax workarounds adopted by many states).
- Sunsets the cap entirely after 2030, pending further legislation.
2025 SALT Deduction Cap Changes:
| Filing Status | Pre-OBBBA Cap | Post-OBBBA Cap (2025) |
| Single | $10,000 | $20,000 |
| Married Filing Jointly | $10,000 | $40,000 |
| Married Filing Separately | $5,000 | $20,000 |
Inflation indexing begins in 2026 and is tied to the Chained Consumer Price Index (C-CPI-U), which typically grows more slowly than traditional CPI but ensures the cap doesn’t remain flat.
Tax Planning Strategies Using AI Tools
1. Entity-Level SALT Deduction Optimization
States with pass-through entity (PTE) elections can benefit from dual-level SALT relief. Our AI tax planning tool can:
- Identify whether the client qualifies for entity-level deductions.
- Simulate scenarios comparing entity vs. individual deduction benefits.
- Adjust for state-specific compliance rules (e.g., California’s PTE elective tax form 3893).
2. Itemization vs. Standard Deduction Forecasting
With the higher SALT cap and expanded standard deduction under OBBBA (Section 70102), clients may toggle between itemizing and taking the standard deduction across tax years. Use AI tax research to:
- Analyze tax returns to determine deduction thresholds.
- Project marginal tax savings for clients based on itemization.
- Recommend prepayment of local taxes in high-income years.
3. High-Net-Worth SALT Bunching
For clients subject to Alternative Minimum Tax (AMT), bunching state income or property tax payments into high-income years can yield material tax savings. Our agentic AI in tax identifies AMT exposure and automates SALT bunching projections under the new AMT phaseouts in Section 70107.
AI Tax Tools That Supercharge SALT Planning
Harness AI to navigate complex SALT planning with confidence:
- Hive Tax AI – Our flagship platform combining AI tax research, planning, and return analysis in a single dashboard.
- IRS SALT Deduction Resources – Reference updated guidance on SALT deductibility: IRS Topic No. 503.
- State-by-State PTE Guidance – Use our AI assistant to retrieve current PTE rules by jurisdiction.
Final Thoughts and Next Steps
The OBBBA ushers in a new era for SALT planning. Tax professionals now have an expanded toolkit, but also new complexity. The smartest firms will lean on AI tax tools, automated diagnostics, and personalized planning simulations to stay ahead.
👉 Try our AI tax research tool today or book a free demo and see how you can serve your clients with confidence, accuracy, and speed.
Keywords: AI tax research, AI tax tool, AI tax planning tool, agentic AI in tax, SALT deduction cap, One Big Beautiful Bill Act, PTE tax deduction, SALT workaround, tax planning with AI
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