Limitation on Individual Deductions for Certain State and Local Taxes, Etc
Section 70120 · Sec. 70120 ·
What this chapter is about
This part replaces the flat cap on state and local tax deductions. The new cap is $40,000 in 2025 and rises a little each year. It shrinks for people with higher incomes. From 2030 it drops back to $10,000.
“by striking "$10,000 ($5,000 in the case of a married individual filing a separate return)" and inserting "the applicable limitation amount (half the applicable limitation amount in the case of a married individual filing a separate return)".”
The section strikes the figures $10,000 and $5,000 from section 164(b)(6) of the Internal Revenue Code of 1986 and inserts a reference to the applicable limitation amount, or half of it for a married individual filing separately. It also strikes the words and before January 1, 2026.
What the document actually says
“by striking "$10,000 ($5,000 in the case of a married individual filing a separate return)" and inserting "the applicable limitation amount (half the applicable limitation amount in the case of a married individual filing a separate return)".”
That sentence, in plain words
A flat dollar cap is taken out. A named figure is put in its place. A married person filing alone gets half of it.
What this is about
The new figure is set out later in the section. Words setting an end date are also struck. So the cap carries on with no end year.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“in the case of any taxable year beginning in calendar year 2025, $40,000,”
The section adds a new paragraph (7) to section 164(b) of the Internal Revenue Code of 1986 setting the applicable limitation amount at $40,000 for a taxable year beginning in 2025, $40,400 for one beginning in 2026, 101 percent of the previous year's figure for a year beginning after 2026 and before 2030, and $10,000 for a year beginning after 2029.
What the document actually says
“in the case of any taxable year beginning in calendar year 2025, $40,000,”
That sentence, in plain words
For a tax year that begins in 2025 the figure is $40,000.
What this is about
For 2026 it is $40,400. After that it grows by 1 percent a year. From 2030 it drops back to $10,000.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70120 in the PDF
What the document says
“the applicable limitation amount shall be reduced by 30 percent of the excess (if any) of the taxpayer's modified adjusted gross income over the threshold amount (half the threshold amount in the case of a married individual filing a separate return).”
The section reduces the applicable limitation amount, for a taxable year beginning before January 1, 2030, by 30 percent of the taxpayer's modified adjusted gross income above the threshold amount, or half that threshold for a married individual filing separately. The threshold is $500,000 for a year beginning in 2025, $505,000 for one beginning in 2026, and 101 percent of the previous year's figure for a year beginning after 2026. Modified adjusted gross income means adjusted gross income increased by any amount excluded under section 911, 931 or 933.
What the document actually says
“the applicable limitation amount shall be reduced by 30 percent of the excess (if any) of the taxpayer's modified adjusted gross income over the threshold amount (half the threshold amount in the case of a married individual filing a separate return).”
That sentence, in plain words
The cap shrinks as income rises. It drops by 30 cents for each dollar above a set line. A married person filing alone gets half that line.
What this is about
The line is $500,000 for a tax year in 2025. It is $505,000 for 2026. After that it grows by 1 percent a year.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70120 in the PDF
What the document says
“The reduction under clause (i) shall not result in the applicable limitation amount being less than $10,000.”
The section provides that the phasedown may not bring the applicable limitation amount below $10,000.
What the document actually says
“The reduction under clause (i) shall not result in the applicable limitation amount being less than $10,000.”
That sentence, in plain words
The cut may not push the cap below $10,000. That is a floor.
What this is about
So even a high income leaves $10,000. The cut stops once it reaches that point. The floor is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70120 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2024.”
The section applies its amendments to taxable years beginning after December 31, 2024.
What the document actually says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2024.”
That sentence, in plain words
The changes start with tax years that begin after December 31, 2024.
What this is about
Earlier tax years are not touched. The old rules still hold for them. The date is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: replace the flat cap with the applicable limitation amount, set that amount year by year, phase it down against modified adjusted gross income with its threshold amounts, floor the phasedown at $10,000, and fix the effective date.
The definition of modified adjusted gross income is carried in a summary rather than recorded as its own proposal.
The section works by amending section 164(b) of the Internal Revenue Code of 1986, which is not indexed here, so which taxes the cap reaches cannot be checked against anything on this site.
