Did the SALT deduction cap change, and can my S-corp use the PTET workaround?

The cap, briefly: since 2018, individuals who itemize could deduct at most $10,000 of combined state income tax and property tax. OBBBA raised that to $40,000 ($20,000 if married filing separately) for 2025 through 2029. The higher cap phases down by 30% of the amount your modified adjusted gross income exceeds $500,000, but never below $10,000, and both figures rise 1% a year starting in 2026. In 2030 the cap is scheduled to return to $10,000.

Who the higher cap helps: the increase mainly helps itemizers in high-tax states with significant property tax and state income tax whose total exceeded $10,000. For a high-earning consultant or clinician in California, New York, or New Jersey, moving from a $10,000 to a $40,000 cap can be worth several thousand dollars a year, until income climbs into the phase-down range.

The PTET workaround, preserved: many states let a pass-through business (an S-corp or partnership) elect to pay state income tax at the entity level. The entity deducts that tax as a business expense on the federal return, which is not subject to the individual SALT cap, and the owner takes a state credit for it. Earlier drafts of OBBBA would have limited this for service businesses. The final law did not, so the PTET election remains one of the most valuable tools for owners in the roughly three dozen states that offer it.

Why this is a coordination problem: capturing PTET correctly requires the entity to make a timely election (often by a state-specific deadline), pay the tax in the right year, and reflect it on both the business return and your personal return with the matching credit. A missed election or a mistimed payment forfeits the benefit for the year. This is exactly the kind of item that falls through the cracks when bookkeeping, tax filing, and planning sit at three different firms.