InvestNot yet confirmed elsewhere1 publisher2 min readPublished
A $40,000 SALT cap identical for singles and married filers has some couples costing out a paper divorce
High-earning couples are weighing paper divorces or delayed marriage to claim a second $40,000 SALT deduction, Bloomberg reported. The cap reverts to $10,000 in 2030, so the saving has a fixed end date.
The Investor · Invest desk
A California couple registered as domestic partners saved $27,000 in taxes in 2025. Peter and his partner could pay up to $20,000 less federal tax a year filing as singles. The full SALT cap in 2026 needs MAGI of no more than $505,000. The cap reverts to $10,000 in 2030.
| Figure | Value | Note | Claim |
|---|---|---|---|
| California couple's 2025 tax saving | $27,000 | 21 | |
| Less federal tax a year for Peter and partner, up to | $20,000 | Filing separately as singles | 19 |
| Full-cap MAGI limit, 2026 | $505,000 | 7 | |
| SALT cap from 2030 | $10,000 | 10 |
What happened
- Trump's tax cuts last year raised the cap from $10,000, and critics call the identical cap for single filers and married couples a marriage penalty.
- Kovac, a 41-year-old Michigan technology manager, learned that separating legally and each filing as a single taxpayer would let him and his wife of 11 years deduct twice as much.
- California lets couples register as domestic partners with spouse-like rights under state law, but the federal government does not treat them as married, so each can file separately for federal deductions.
- A second California couple held a 120-guest vineyard wedding and registered as domestic partners instead of marrying on paper, and saved $27,000 in 2025, according to the source.
Why it matters
- exposure According to CPA Richard Pon, couples who skip the marriage license have no guarantee of medical or property decisions without separate legal documents, and no automatic 401(k) inheritance or Social Security survivor benefit without estate planning.
- constraint The full $40,000 goes only to itemizers whose deductions exceed the standard deduction and whose modified adjusted gross income is at or below $505,000 in 2026. Above that the cap shrinks, so the highest earners get less.
- decision After the 2030 reversion the extra deduction from filing as two singles falls to at most $10,000, or $2,400 at 24%. That is a 75% drop from $9,600, so a couple restructuring must recover its legal costs while the $40,000 cap lasts.
The savings the couples report are larger than the second cap can produce (or rather, larger than it can produce at the one bracket the source mentions). Filing as two singles adds at most $40,000 of deduction [12]. At the 24% bracket in the source's own example, that is $9,600 of tax [13]. The example itself computes roughly $7,300 on a $30,400 deduction [8]. The figure Peter's family was shown, up to $20,000 a year [19], implies a 50% rate on that extra $40,000 [14]. The vineyard couple's $27,000 in 2025 [21] implies 67.5% [15], and at 24% it would take $112,500 of extra deduction to reach it [16]. The source does not give these couples' brackets or itemize their figures. We think the second cap is part of the saving and other lines of the return supply the rest. A breakdown that reaches $20,000 or $27,000 through the SALT line alone would prove us wrong.
Peter said the objection came first: "At first the reaction was, why go through all this trouble, isn't this over-optimizing?" Then, he said: "But then you look at the numbers and the conclusion becomes obvious." [20] Kovac, who is still deciding, asked the other question: "Would I really put money ahead of my family?" [4] He said the money is "for the kids' accounts, for tuition, for funding things." His wife, he said, is not yet fully convinced [5].
Ed Slott, an accountant at Rockland Center in New York, said divorce is a step few couples will take to cut their tax bill [22]. He said: "Some couples may push the wedding into the next year to capture one final year of tax savings, or to help pay for the wedding itself." [23]
We could be wrong in two directions. The source says the break depends on politics [11], so an extension past 2029 would lengthen the payback and make a paper divorce easier to justify. And if the extra savings come from other lines of the return, as we suspect, filing status matters more than the SALT line alone suggests. Our view is that it is a real planning variable for itemizers with large state and local tax bills, over a short run of years. We think Slott's forecast of few divorces and some delayed weddings is the better one. The evidence is anecdotes, and none of the couples in it has finished a divorce.
What to watch
- A breakdown of the $20,000 and $27,000 savings: if the SALT line alone produces them, the thesis here is wrong.
- Federal filing counts by status, showing whether single or domestic-partner returns rise among itemizers; flat counts would support Slott's forecast.
- Any legislative change to the cap before 2030, since an extension lengthens the payback on a paper divorce.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence45
- Adoption
- Insufficient
- Hype gap+35
- Incentives
- Insufficient
- Confidence50
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
President Donald Trump's tax cuts last year raised the SALT deduction cap to $40,000 from $10,000; itemizers can subtract up to $40,000 of property taxes and state and local income taxes from 2025 adjusted gross income, and because the cap is identical for single filers and married couples, critics call it a marriage penalty.
- [2]
Bloomberg reported on the 12th that high-earning couples are weighing paper divorces or delaying marriage to cut their tax bills.
- [3]
Kent Kovac, a 41-year-old technology manager in Michigan, learned he and his wife of 11 years could save more by divorcing: by separating legally and each filing as a single taxpayer, the couple could deduct twice as much from their income.
- [4]
"Would I really put money ahead of my family?" Kovac said.
- [5]
Kovac said the money is "for the kids' accounts, for tuition, for funding things"; the couple have a two-year-old daughter and his wife is not yet fully convinced.
- [6]
California allows opposite-sex and same-sex couples to become registered domestic partners with generally the same rights, protections and obligations as spouses, but the federal government does not treat domestic partners as married, so a cohabiting California couple can file separately for federal tax deductions.
- [7]
To claim the full $40,000 deduction in the 2026 tax year, a filer's modified adjusted gross income must not exceed $505,000, above which the cap begins to shrink, and itemized deductions must exceed the standard deduction.
- [8]
In the source's example, a deduction of $30,400 in the 24% bracket would cut taxes by as much as about $7,300.
- [9]
Richard Pon, a certified public accountant and financial planner in San Francisco, said couples should weigh the financial and legal consequences of not marrying: without separate legal documents there is no guarantee one partner can make medical decisions or manage property if the other loses capacity, and without estate planning a surviving partner has no automatic right to inherit assets such as a 401(k) and generally cannot claim Social Security spousal or survivor benefits.
- [10]
The SALT cap rises 1% a year through 2029 but reverts to $10,000 in 2030.
- [11]
The source says the tax break depends on politics.
- [12]
Filing as two singles adds at most $40,000 of deduction over filing jointly under a single $40,000 cap.
- [13]
At the 24% bracket used in the source's example, an extra $40,000 of deduction is worth at most $9,600 of tax.
- [14]
A saving of up to $20,000 on an extra $40,000 of deduction implies a 50% rate.
- [15]
A saving of $27,000 on an extra $40,000 of deduction implies a 67.5% rate.
- [16]
At 24%, a $27,000 saving would need $112,500 of extra deduction.
- [17]
After the cap reverts to $10,000 in 2030, filing as two singles adds at most $10,000 of deduction, worth at most $2,400 at 24%.
- [18]
The maximum tax benefit of filing as two singles at 24% falls 75%, from $9,600 to $2,400, when the cap reverts.
- [19]
Peter, who lives in the San Francisco Bay Area, held a wedding last year but registered as a domestic partner instead of filing a marriage license; their parents came around after calculations showed the two could pay up to $20,000 less in federal taxes a year by filing separately as single taxpayers.
- [20]
Peter said: "At first the reaction was, why go through all this trouble, isn't this over-optimizing?" and "But then you look at the numbers and the conclusion becomes obvious."
- [21]
Another California couple held a 120-guest vineyard wedding and signed a ketubah but registered as domestic partners rather than filing a marriage license, a fact even their parents do not know; they saved $27,000 in taxes in 2025 by not registering their marriage.
- [22]
Ed Slott, an accountant at Rockland Center in New York, said not many people will go as far as divorcing to save on taxes.
- [23]
Slott said: "Some couples may push the wedding into the next year to capture one final year of tax savings, or to help pay for the wedding itself."
Sources
1 independent publisher whose own reporting we read for this story.
- en.sedaily.comU.S. Tax Cut Creates Marriage Penalty, Pushing Couples to Split on Paper
1 article · October 12, 2026
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