The SALT deduction cap is $40,400 for 2026. In Texas that line is entirely property tax — we have no state income tax to add to it — so for a family whose Travis County bill runs $25,000 to $50,000, the old $10,000 cap left most of that bill undeductible. The new one leaves far less on the table — right up until your income enters the phaseout, which is where a lot of our clients live. That’s a real change, and it isn’t the one that matters most.
The one that matters is the phaseout. Above $505,000 of modified adjusted gross income the cap falls thirty cents for every dollar of income, and it keeps falling until it hits a floor of $10,000 at roughly $606,000. Inside that band you aren’t simply paying your bracket. You’re surrendering deduction as you earn. A couple in the 32% bracket is really paying about 41.6 cents on the marginal dollar; higher up, in the 35% bracket, about 45.5 cents. Take a hypothetical couple at $560,000 of MAGI carrying a $38,000 tax bill — their cap drops to $23,900, which is $16,500 of deduction gone on $60,000 of additional income. The numbers are illustrative and turn on the facts of a given return.
Look at who this catches in Austin. A partner year. A bonus that lands in December instead of January. A business sale, exercised options, a Roth conversion done for sound reasons in a year that was already close to the line. What these share is that the timing is discretionary, which is exactly what makes the band worth knowing about in September rather than April.
Two things get missed. The first is that none of it helps unless your itemized total clears the $32,200 standard deduction — a $38,000 property tax bill clears it alone, a $22,000 bill with no mortgage interest and no giving does not. The second is that not every line on a Texas tax statement is a deductible property tax. Ad valorem taxes deduct. Public improvement district assessments in newer developments largely fund capital improvements and bond repayment, and those don’t — only the maintenance, repair, and interest portion is deductible, and only if you can document the split. If you can’t, none of it is. The figure on the bill and the figure on Schedule A aren’t always the same number.
Here’s what we’d tell any client: the levers that move this sit above the line and upstream of April. Retirement plan contributions, where for a business owner a cash balance plan is often the only lever large enough to pull someone from the top of the band back under the threshold — though that plan commits the business to funding it in future years, brings coverage obligations where there are employees, and carries an actuarial cost of its own. A qualified charitable distribution straight from an IRA once you’re 70½, which reduces AGI — writing a larger check to charity does not, because charitable deductions sit below the line and never touch it. Installment treatment on a private business or property sale, spreading gain across years instead of stacking it into one — though it isn’t available on publicly traded stock. And the one that inverts the usual advice: conversion income inside this band carries the same thirty-cent drag, so a Roth conversion you’d pencil at 32% actually costs closer to 42. Sometimes it’s still the right move. It shouldn’t be the year you find that out by accident. Each of these carries a tradeoff — deferred income, tied-up liquidity, decisions that don’t reverse — and which ones fit depends on the whole picture, not on this one deduction.
The cap reverts to $10,000 in 2030, so this is a window with a clock on it. Q3 estimates are due September 15. If your income lands anywhere near that band this year, this is worth an hour with us and your CPA while the year is still open — we model it, and your CPA confirms the treatment on your actual records.
For informational and educational purposes only. Not investment, tax, or legal advice. Lake Hills Wealth Management does not provide tax or legal advice and nothing herein is a recommendation with respect to any specific transaction or a recommendation to any individual. The cap, phaseout thresholds, bracket figures, and standard deduction referenced are those in effect for the 2026 tax year and are adjusted periodically; the increased cap is scheduled to revert in 2030 under current law, which is subject to change. Your own result depends on filing status, modified adjusted gross income as defined for this purpose, whether you itemize, and the composition of your local tax statement. The deductibility of any special assessment depends on how the assessing district allocates it and on your ability to substantiate that allocation. Any decision to accelerate, defer, or convert income should be confirmed in advance with your certified public accountant, who is responsible for the tax treatment on your records. Additional information about Lake Hills Wealth Management, including our Form ADV Part 2A and Form CRS, is available at lakehillswm.com. Lake Hills Wealth Management is an SEC-registered investment advisor. Registration with the SEC does not imply a certain level of skill or training.