Roth individual retirement account conversions have become a popular way for investors to reduce lifetime taxes. But for some high earners, the strategy could hurt eligibility for the state and local tax deduction, known as SALT.
President Donald Trump’s “big beautiful bill” temporarily increased the SALT deduction cap from $10,000 to $40,000 starting in 2025. The limit increases by 1% yearly through 2029 and reverts to $10,000 in 2030.
Roth conversions transfer pretax or nondeductible IRA funds to a Roth IRA, which kickstarts future tax-free growth. The trade-off is incurring regular income during the year of conversion.
Extra income can impact tax breaks — including the $40,000 SALT cap — due to phaseouts, or benefit reductions, once earnings exceed certain thresholds, experts say.
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