For tax years 2025 through 2029, though, the\u00a0OBBB temporarily raises the SALT cap to $40,000 for most filers. The limit will increase 1 percent each year through 2029, then drops back to $10,000 in 2030. For the 2025 tax year, the $40,000 cap is reduced by 30 cents for every dollar of MAGI over $500,000 ($250,000 for married people filing separately), to as low as $10,000.<\/p>\n
Because of the higher SALT deduction cap, \u201cwe are expecting a lot more taxpayers to itemize,\u201d says Brian Schultz, leader of the tax practice at Plante Moran Wealth Management.<\/p>\n
7. Not planning for pretax retirement account withdrawals<\/p>\n
Traditional 401(k)s and IRAs offer pretax contributions, lowering your current taxable income, but you have to pay income tax on that money when you start making withdrawals. Without a strategy in place, you could be digging deeper into your pocket than you would otherwise have to. \u00a0<\/p>\n
If you have a large nest egg <\/a>in pretax retirement accounts, \u201cyou\u2019re accumulating a tax time bomb,\u201d warns Schultz. Not preparing for the tax implications of required minimum distributions (RMDs) can lead to a surprise tax bill if the amount of your distribution pushes you into a higher tax bracket, and it could trigger Medicare premium surcharges as well.<\/p>\n \u201cThat\u2019s where everything kind of comes back to proactive planning,\u201d says Andy Evans, an Edward Jones financial adviser in Houston.<\/p>\n Many financial advisers recommend that clients transfer money from traditional 401(k)s and IRAs to Roth accounts. Because traditional retirement accounts are funded with pretax contributions, withdrawals are taxed at ordinary income rates. But Roth accounts are funded with after-tax dollars, which means two things: Your withdrawals are tax-free, and there are no RMDs. (Future earnings grow tax-free as well.)\u00a0<\/p>\n \u201cBefore the age of required distributions, we can plan ahead through Roth conversion strategies<\/a> to lower those RMDs,\u201d Evans says.<\/p>\n 8. Getting the timing wrong on Roth conversions<\/p>\n